(Bloomberg) -- Hong Kong stocks posted the biggest weekly advance in three months, helped by improving Chinese manufacturing data and talk that policy makers will prevent sharp declines in the yuan.
The Hang Seng Index rose 0.2 percent on Friday to 22,503.01 at the close, extending its gain for the week to 2.3 percent. Wharf Holdings Ltd. led the weekly advance after a ratings upgrade from Citigroup Inc., pushing a measure of developers up by the most since September. The Shanghai Composite Index rose 1.6 percent for the week at the close, its first advance since November.
The offshore yuan headed for a record weekly rally after interbank borrowing rates soared in Hong Kong and policy makers were said to be preparing contingency plans to support the yuan. Confidence in China's economy grew as several gauges tracking December services and factory activities released this week showed improvement from a month earlier.
“A stronger yuan, easing capital outflow pressure and better economic data all helped with a good start this year," said Paul Pong, a fund manager at Pegasus Fund Managers Ltd. in Hong Kong. "The yuan was the major reason, as more than half of Hong Kong's listed companies earn the currency directly. Their profits will get boosted, benefiting stock valuations."
Wharf surged 9.1 percent for the week, the most since March last year, while Hang Lung Properties Ltd. followed with a 5.2 percent gain. China Overseas Land & Investment Ltd. rose 1.7 percent on Friday.
- Foreign investors sold a net 4.95b yuan of mainland shares this week through the Shanghai-Hong Kong stock link program, the most since Nov. 2015, according to data compiled by Bloomberg
- All three China IPOs surged by the 44% price limit in debut trading: Shangdong Dawn Polymer Co., Shenzhen Kinwong Electronic Co., and Shandong Sito Biotechnology Co.
--With assistance from Kana Nishizawa To contact the reporter on this story: Jeanny Yu in Hong Kong at jyu107@bloomberg.net. To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Ryan Lovdahl, Robin Ganguly
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