Hong Kong stocks rose, led by utilities, ahead of the Federal Reserve’s two-day policy meeting starting later on Tuesday. Gains were limited after the benchmark index capped its highest close since August 2011 on Monday.
Skyworth Digital Holdings jumped 3.4 per cent after the television maker’s sales volume surged last month.
Huaneng Power International, which gets most of its revenue from China, rose 2.2 per cent after BNP Paribas said China’s electricity demand will grow next year. Cathay Pacific Airways slid after the carrier’s cabin crews authorized union leaders to initiate industrial action amid a pay dispute.
The Hang Seng Index climbed 0.2 per cent to 22,320 at the midday break, after falling as much as 0.2 per cent.
About the same number of stocks climbed as declined, with trading volume about 31 per cent below the 30-day average for the time of day, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index of mainland companies climbed 0.2 per cent to 11,016.22.
“I don’t expect the index to have another big move after going into a relatively high level,” said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong. “The US Federal Reserve is likely to continue its easing monetary policy. China’s economic indicators have been in line with market expectation, turning more stable and positive. The macro term is supportive.”
Hong Kong’s benchmark index rose 21 per cent this year through yesterday amid a global wave of monetary easing and signs of recovery in the US and China.
The Hong Kong Monetary Authority said US$7 billion of funds entered the city since the Fed embarked on a third round of quantitative easing in September. The Hang Seng’s year-to-date gain is about double the MSCI Asia Pacific Index’s increase, and compares with a 13 per cent advance for the Standard & Poor’s 500 Index.
“Hot money is still coming into Hong Kong and it will have a good support to the market as a whole,” said Yip.
The Hong Kong gauge traded at 11.7 times average estimated earnings yesterday, compared with 13.7 for the S&P 500 and 12.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Futures on the Standard & Poor’s 500 Index fell 0.2 per cent today. The S&P 500 gained less than 0.1 per cent yesterday as economic data in China beat estimates and investors weighed prospects for a US budget deal.
Federal Reserve policy makers begin a two-day meeting later on Tuesday that will be followed by updated projections on economic growth, unemployment, inflation and interest rates on Wednesday.
Fed officials are considering whether to supplement a US$40 billion a month of mortgage-bond purchases with Treasury purchases when their Operation Twist program expires at the end of the month.
Futures on the Hang Seng Index advanced 0.4 per cent to 22,343. The HSI Volatility Index declined 3.1 per cent to 15.18, indicating traders expect a swing of 4.4 per cent on the equity benchmark in the next 30 days.