Hong Kong stocks surged, as the benchmark index headed for its highest since December. China’s factory activity expansion at the fastest pace this year is the primary reason behind this steep rise.
Galaxy Entertainment Group Ltd., the gaming company controlled by billionaire Lui Che-woo, rose 2.6 percent as Bank of America Corp.’s Merrill Lynch unit said "Macau casino revenue will revive this month." Anhui Conch Cement Co., China’s biggest producer of the building material, jumped 2.1 percent. Li & Fung Ltd., the world’s biggest supplier of clothes and toys to retailers, climbed 1.6 percent in the positivity run for its Global Brands Group spinoff.
The Hang Seng Index (HSI) rose 1.1 percent to 23,348.13 as of 10:25 a.m. in Hong Kong, for its highest close since Dec. 10. The Hang Seng China Enterprises Index, also known as the H-share index, rose 0.5 percent to 10,386.06. Markets in the city were shut for a holiday yesterday.
“Investors remain quite positive, helped by encouraging Chinese manufacturing data,” said Market research expert. “If the Hang Seng Index fails to break through the 23,500 resistance level in the near term, pressure for a correction may increase.”
China’s official gauge of factory activity released yesterday closing at 51 in June, matching analysts’ median estimate and rising from 50.8 the month before. A survey of the sector showed growth from to 50.7 from 49.4 in May. Readings above 50 signal growth.
The H-share index fell 4.5 percent in the first half as investors weighed whether China’s stimulus was enough to prop up growth. The measure traded at 7.2 times estimated earnings at the last close, compared with 10.8 for the Hang Seng Index and a multiple of 16.7.
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