Hong Kong stocks up, halt 3-day decline; Henlius soars by over a fifth on buyout plan

The Hang Seng Index climbed 0.3 per cent to 18,072.90 at the close, after a 2.2 per cent decline over the past three days. The Hang Seng Tech Index slid 0.6 per cent and the Shanghai Composite Index lost 0.4 per cent.

Beaten-down Chinese property developer stocks also gained, with Longfor Group Holdings rising 2.9 per cent to HK$11.46 and China Resources Land up 1.9 per cent to HK$27.20. Among other major gainers, Mengniu Dairy rallied 4.5 per cent to HK$13.94 and China Unicom advanced 2 per cent to HK$6.78.

“Hong Kong stocks are still attractive and have a high risk-reward ratio on the backdrop of improving expectations about fundamentals going forward,” said Kong Rong, an analyst at Tianfeng Securities. The 82-stock Hang Seng benchmark trades at an average of 8.9 times projected earnings for this year, the second cheapest among the world’s key markets, according to Bloomberg data.

The Communist Party’s third plenary session due next week will be in focus, with investors’ expectations building that long-term economic reform plans may be announced at the high-stakes political gathering.

Buying interest also came after traders ramped up the bets on an earlier cut in the interest rate by the Federal Reserve. The probability of a 25 basis-point reduction in Fed’s September policy meeting has now risen to 61 per cent from 45 per cent a month ago, according to the data by CME Group. The US is expected to reveal the May data on personal consumption expenditure, a gauge preferred by the Fed for its rate policy.