Hong Kong: Chinese stocks rise on stimulus, US rate outlook

[HONG KONG] Chinese stocks in Hong Kong headed for a two-week high as casino operators and automakers extended gains on targeted government support and traders pushed back estimates for the timing of higher US interest rates.

The Hang Seng China Enterprises Index gained 2.6 per cent to 9,941.75 as of 10:21 am in Hong Kong, poised for its highest close since Sept 18. Gaming companies surged after reports that China may move to bolster the city's economy, and figures showed a jump in Chinese visitors to Macau on the first three days of a weeklong holiday. Great Wall Motor Co headed for a three-day, 37 per cent advance after a tax cut on passenger-vehicle purchases. A report last week showed US employers added 142,000 workers in September, less than the lowest estimate of 96 economists surveyed by Bloomberg.

"Investors are not as risk averse," said Ben Kwong, a director at brokerage KGI Asia Ltd. With US jobs numbers missing estimates, "investors tend to take negative news as positive as that lowers the chances of interest-rate hike in October or even December. China is stepping up its efforts to support the economy, not only monetary policy but fiscal policy as well." The Hang Seng Index gained 1.9 per cent. Mainland markets will remain shut until Oct 8 for National Day holidays.

Chinese policy makers are increasing targeted stimulus after reductions in interest-rate and reserve ratio requirement failed to reverse an economic slowdown. The nation's growth will slow to 6.8 per cent this year, below the government's goal of 7 per cent, according to the median of economist estimates compiled by Bloomberg. The People's Bank of China reduced the minimum home down payment for first-time buyers in cities without purchase restrictions last week, buoying shares of developers.

The US jobs report also revised down employment gains in the previous two months by a total of 59,000 jobs. The probability the Fed will raise rates by its Dec. 15-16 meeting fell to 33 per cent from 46 per cent before the jobs report, according to futures data compiled by Bloomberg.

BLOOMBERG