Hong Kong Stocks Gain on Italy Optimism; Shenzhen Trading Slows

(Bloomberg) -- Hong Kong stocks rose the most in two weeks, as Asian investors joined global counterparts in shrugging off the defeat of Italy’s constitutional referendum.

The Hang Seng Index ended 0.8 percent higher for the day, while a gauge of volatility on the equity gauge slid to a 1 1/2-year low. A selloff in Asia spurred by concern about the Italian vote had reversed by the time European markets opened, and the Dow Jones Industrial Average closed at an all-time high in New York. Volume on the benchmark index was 20 percent less than its 30-day average, according to data compiled by Bloomberg.

“The news on Italy didn’t create big fluctuations in financial markets, so that’s good for Hong Kong,” said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities Ltd. “The market may remain firm but the momentum isn’t that great right now.”

Tuesday’s gain helped pare the quarterly loss for Hong Kong’s benchmark equity gauge to 2.7 percent. Trading through the exchange link with Shenzhen was muted on the program’s second day, with investors making net purchases of about 520 million yuan ($76 million) in Hong Kong and 1.94 billion yuan in the mainland technology hub. On Monday, eight of traders’ 10 most popular Shenzhen picks declined.

Galaxy Entertainment Group Ltd. climbed for a second day after plunging on Friday following a report Macau plans to more closely monitor VIPs bringing cash into the gambling enclave. Hang Lung Properties Ltd. and Sino Land Co. were among companies leading gains on the Hong Kong measure, rising at least 1.7 percent. The Hang Seng China Enterprises Index added 0.6 percent, while the Shanghai Composite Index fell 0.2 percent. The Shenzhen Composite Index increased 0.2 percent.

Italy Risk

Political risk from Italy hasn’t spread beyond its borders as markets were correctly positioned for the anti-establishment mood sweeping around the world. This was a departure from the Brexit referendum and Donald Trump’s surprise election, when traders were caught out by populist votes.

• Huaan Securities Co. rose by the 44 percent limit on the first day of trading in Shanghai following its IPO

• Geely Automobile Holdings Ltd. climbed 3.2 percent after posting a 99 percent increase in November sales from a year earlier

• China Pacific Insurance (Group) Co., China Life Insurance Co. and New China Life Insurance Co. were among companies leading gains on the Hang Seng China Enterprises Index. The Shenzhen-Hong Kong stock link will give insurers more channels to invest, First Shanghai’s Yip said

• SJM Holdings Ltd. jumped 7 percent after Goldman Sachs Group Inc. raised its rating to buy from neutral. Macau’s VIP gross gaming revenue is improving as big players are returning, Goldman said in a note

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net. To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Sarah McDonald, Robin Ganguly

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