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Hong Kong shares rebound further from 3-week low, Macau casinos soar
October 3, 2013 / 4:50 AM / 4 years ago

Hong Kong shares rebound further from 3-week low, Macau casinos soar

* HSI +1.0 pct, H-shares +1.5 pct; China shut for holiday

* Macau casinos lifted by strong Chinese holiday visitors

* Sands China, Galaxy Entertainment at record highs

* China dairy sector jumps ahead of Huishan’s FTSE inclusion

By Clement Tan

HONG KONG, Oct 3 (Reuters) - Hong Kong shares rebounded further from three-week lows early on Thursday, lifted by the Macau casino and Chinese consumer sectors on hopes that the ongoing Golden Week holiday in the mainland will generate healthy revenue.

China’s official purchasing managers index (PMI) for the non-manufacturing sector came in at 55.4, its highest since March, further buoying market sentiment as benchmark indexes recover steep losses earlier this week.

At midday, the Hang Seng Index, which had closed on Monday at its lowest since Sept. 9, was up 1 percent at 23,207 points. The China Enterprises Index of the top Chinese listings in Hong Kong climbed 1.5 percent.

Hong Kong markets were shut on Tuesday for China’s National Day holiday, while the mainland will reopen Oct. 8.

Gains on the day came in lacklustre turnover, pointing at underlying caution as the U.S. government shutdown dragged on, but helped both indexes recover steep losses on Monday as the third quarter came to a close.

“Monday’s dip at quarter-end was irrational to begin with, so we’re seeing a recovery of that move down. Of course, there’s the good services PMI, but gains are coming in weak turnover,” said Hong Hao, chief strategist at Bank of Communications International Securities.

Hong added that the Hang Seng benchmark could return to 2013 highs in February at about 24,000 by year’s end, but is unlikely to break out of chart resistance at about 25,000 without a dramatic turnaround in China’s economy.

That level was recorded in November 2010 and remains the highest the index has reached for more than seven years.

On Thursday, Macau casinos were lifted by a strong start to the Oct. 1-7 National Day holiday. Sands China jumped 3.2 percent and Galaxy Entertainment 3 percent, to hit respective record highs.

Hong Kong August retail sales data is due later in the day, while Macau gaming revenue data for September is also expected by this week.

Deutsche Bank is already expecting a “record-breaking” October after Macau visitors from the mainland rose 16 percent on Oct. 1 from a year earlier, even as total visitor arrival numbers fell 6 percent.

“This year, strong Chinese demand has pushed up hotel rates. This has in turn discouraged Hong Kong people from visiting Macau. This displacement ... is positive for rising bet limits as spend per trip is higher for Chinese visitors,” Deutsche analysts said in a note on Thursday.

Luxury retailers also got a lift, with Italian brand Prada up 2.4 percent and luxury watch retailer Hengdeli climbing 2.1 percent. Gold miners and jewellery retailers also got a lift from rebounding gold prices.

There was strong interest in the Chinese dairy sector ahead of the inclusion of China Huishan Dairy Holdings on FTSE’s All-World, All-Emerging and FTSE China (Hong Kong listed) indexes effective Oct. 7.

Huishan Dairy, which just made its listing debut last Friday, surged 7.9 percent, lifting sector rivals China Modern Dairy and China Mengniu Dairy. Milk power producer Biostime jumped 5.5 percent.

Local media reported that Chinese dairy companies are hiking prices during the Golden Week holiday.

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