Hong Kong Stocks Rise; China Merchants Leads Lenders Higher

Hong Kong stocks gained, with China Merchants Bank Co. leading an advance among Chinese banks after saying its profit last year more than doubled even as the government introduced measures to curb lending.

"Better earnings are expected from Chinese banks despite the loan tightening measures after China Merchants Bank's announcement," said Tat Auyeung, who oversees $400 million at Apex Capital Management in Hong Kong.

The Hang Seng Index climbed 103.21, or 0.4 percent, to 27,286.39 as of 3:06 p.m. local time, with finance-related stocks contributing the most to the advance. The Hang Seng China Enterprises Index, which tracks 43 "H shares" of Chinese companies gained 1.3 percent to 15,787.12.

China Merchants Bank, the nation's largest dual-currency credit-card issuer, soared HK$1.60, or 5.3 percent, to HK$31.70, the biggest gain since Nov. 26. Net income in 2007 rose 110 percent, on higher revenue from increased lending, according to a statement to the Hong Kong stock exchange that cited unaudited numbers. The stock climbed 93 percent last year.

Bank of Communications Co., China's fourth-biggest bank by market value, rose 24 cents, or 2.4 percent, to HK$10.30. Industrial and Commercial Bank of China, the country's biggest lender, added 6 cents, or 1.1 percent, to HK$5.33.

The prospect of more measures to curb overinvestment and growth in China's economy prompted BNP Paribas SA to last week recommend investors be wary of Chinese financial stocks.

China last month raised borrowing costs to a nine-year high and ordered the biggest increase in four years in the proportion of deposits that banks must set aside as reserves.

Beating Expectations

CLP Holdings Ltd., the bigger of Hong Kong's two electricity producers, rose 80 cents, or 1.4 percent, to a HK$58. The company reached a better-than-expected agreement with the city's government on a rate of return from investment in power plants, Angello Chan and Edwin Chen, analysts at Credit Suisse said in a report today.

The analysts raised their target price on CLP's shares to HK$73.50, from HK$70.50. Smaller rival Hongkong Electric Holdings Ltd. fell 40 cents, or 0.9 percent, to HK$43.90.

Twenty-three stocks advanced, while 17 declined. January futures rose 0.2 percent to 27,338.

The following stocks either rose or fell. Stocks symbols are in brackets after company names.

China Coal Energy Co. (1898 HK), the nation's second- largest coal producer by sales, jumped HK$1.10, or 4.4 percent, to HK$25.85. Chinese regulators set a date to review the company's domestic share sale plan.

PetroChina Co. (857 HK), Asia's largest oil company by market value, rose 14 cents, or 1 percent, to HK$14.00. It plans to sell a cargo of liquefied petroleum gas for loading at the Jabung field in Indonesia's Jambi province, said two traders with knowledge of the offer.