By Hanny Wan
April 2 (Bloomberg) -- Hong Kong stocks jumped, erasing the benchmark index’s losses in 2009, as better-than-expected U.S. economic reports bolstered confidence global growth will recover.
HSBC Holdings Plc, which got 24 percent of its revenue from North America in 2008, surged 15 percent as U.S. Treasury Secretary Timothy Geithner said he sees “encouraging signs” in financial markets. China Resources Land Ltd., a government- controlled property developer, soared 14 percent after China Business News said Shanghai’s residential property sales climbed. China Petroleum & Chemical Corp. advanced 6.2 percent as Goldman Sachs Group Inc. recommended investors buy the stock.
The Hang Seng Index rallied 1,002.43, or 7.4 percent, to close at 14,521.97. The surge, the most since Dec. 8, left the gauge up 0.9 percent for the year. The measure has soared 28 percent from a four-month low on March 9 as governments widened measures to ease the financial crisis and banks such as Standard Chartered Plc reported strong starts to 2009.
“People are chasing the rally because previous forecasts were too negative, and they suddenly realize that the rate of deterioration isn’t as fast as they had expected,” said Pauline Dan, chief investment officer at Samsung Investment Trust Management in Hong Kong, which oversees $64 billion in assets. “However, risks still remain and things will at best stabilize at this level.”
The Hang Seng China Enterprises Index, which tracks so- called H shares of Chinese companies, rose 6.1 percent to 8,572.20.
Economic Uncertainties
Futures on the Standard & Poor’s 500 Index gained 1.9 percent in trading today. The gauge advanced 1.7 percent yesterday as the Institute for Supply Management said its factory index increased to 36.3 last month, a third consecutive advance. U.S. pending home resales rose 2.1 percent in February, exceeding economists’ forecasts.
HSBC jumped 15 percent to HK$49.40, its highest close since March 2. Bank of Communications Co., part owned by HSBC, climbed 7.7 percent to HK$5.75. Bank of East Asia Ltd., which reported in February its first loss in four decades, rose 8.2 percent to HK$16.42.
“The chance of a global recovery does exist. Markets will improve in the short term, and that will trigger funds to add exposure to equities,” said Chris Leung, a Hong Kong-based portfolio manager at Taifook Asset Management Ltd., which oversees $500 million. “If the engine of the banking system re- starts, the economy could get a boost, but it’s going to take time.” Leung said he is buying financial stocks.
‘Encouraging Signs’
A gauge tracking financial shares on the Hang Seng Index accounted for 61 percent of the measure’s gain as Geithner said a recovery is emerging in the banking sector.
“You’re seeing encouraging signs of improvement in our markets -- we want to reinforce that,” Geithner said yesterday in a Bloomberg Television interview in London, where he is attending the Group of 20 leaders summit. “I’ve never seen this much support around the world.”
All but two stocks on the 42-member Hang Seng Index advanced. April futures added 8.3 percent to 14,560.
Shares on the measure are valued at an average 13 times estimated profit, down from 18.6 times at the beginning of 2008. The gauge tumbled 48 percent last year as the global slowdown deepened.
China Resources Land surged 14 percent to HK$14. Guangzhou R&F Properties Co., the biggest property developer in the southern China city, rallied 18 percent to HK$11.54.
Home sales in Shanghai totaled 1.5 million square meters in March, a 91 percent increase from the previous month, Shanghai- based China Business News said.
Casino Revenue
Sinopec, as China Petroleum is known, jumped 6.2 percent to HK$5.47. Goldman Sachs raised its rating on the company, Asia’s biggest oil refiner, to “buy” from “neutral” on optimism fuel-price reforms in China will boost earnings.
Macau gaming stocks gained on speculation casino earnings will improve. Gross casino revenue dropped 6 percent in March from a year earlier, Portuguese news agency Lusa reported yesterday. That compared with a 15.5 percent decline in February and a 17 percent fall in January, Lusa said.
Melco International Development Ltd., controlled by the son of billionaire Stanley Ho, jumped 18 percent to HK$2.98. Galaxy Entertainment Group Ltd., controlled by billionaire Lui Che-woo, gained 11 percent to HK$1.39.
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net
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