(Bloomberg) -- Hong Kong stocks eked out a gain for a second day as investor optimism that Hillary Clinton will clinch the U.S. presidential election offset a larger-than-expected drop in Chinese exports.
The Hang Seng Index closed 0.5 percent higher. Galaxy Entertainment Group Ltd. and Sands China Ltd. were among the top gainers, while Hong Kong Exchanges & Clearing Ltd. posted the biggest two-day increase in a month amid optimism the start of a stock link with Shenzhen is imminent. China's exports fell 7.3 percent in October, compared with the median estimate for a 6 percent decline. The Shanghai Composite Index rose 0.5 percent to a 10-month high.
Hong Kong's equities have taken their lead from the U.S. election this week, with the local currency's peg to the greenback ensuring that the city's monetary policy is tied to that of the Federal Reserve's. Property developers plunged on Monday as the government unveiled moves to limit home price gains. A Bloomberg Politics national poll puts Clinton ahead of Donald Trump by three percentage points as Americans prepared to cast their votes Tuesday.
“Hong Kong shares are rising as Hillary Clinton's prospects improve,” said Ronald Wan, chief executive of Partners Capital International Ltd. in Hong Kong. “The rally will be limited by housing curbs whose negative impact will be felt in a longer term in sectors including retail and finance.”
A gauge of property developers rallied after dropping the most since August 2015 on Monday. Sun Hung Kai Properties Ltd. added 1.6 percent and Cheung Kong Property Holdings Ltd. rose 1.3 percent. The two plunged at least 8 percent on Monday after the Hong Kong government raised stamp duty to 15 percent to cool prices in the world's most expensive housing market.
The dip in property shares is an opportunity to accumulate because the stamp duty increase will impact the secondary market more than developers, Daiwa Capital Markets Hong Kong Ltd. analyst Jonas Kan wrote in a note. Developers are able to offer flexible payment terms and pricing, Kan said.
The Hang Seng Index closed at 22,909.47. The Shanghai Composite's 14-day relative strength index rose to 66, near the level of 70 that indicates to some traders that a reversal is due. The Hang Seng China Enterprises Index advanced 0.5 percent.
MGM China Holdings Ltd. climbed 2.8 percent to the highest close since August last year after its parent reported third-quarter earnings that beat analysts' estimates. Galaxy Entertainment advanced 1.5 percent, while Sands China added 0.9 percent. Hong Kong Exchanges & Clearing rose 0.5 percent, taking a two-day increase to 2 percent.
Chinese lenders' H shares carved out gains, with Bank of China Ltd. rising 1.2 percent, Agricultural Bank of China Ltd. adding 0.6 percent and Industrial & Commercial Bank of China Ltd. climbing 1.1 percent. China Mengniu Dairy Co. rose 2.3 percent.
In Shanghai, Kweichow Moutai Co., China's biggest spirit maker, surged 1.5 percent to a four-month high, while Wuliangye Yibin Co. rose 1.1 percent. Zhejiang Langdi Group Co. jumped 5.2 percent to its highest level since mid-July.
Coal Shares
Shaanxi Coal Industry Co. plunged 4.1 percent and China Coal Energy Co. fell 2.3 percent, while Yanzhou Coal Mining Co. retreated 1.4 percent. The declines came after Yanzhou Coal joined two other companies in cutting prices of the commodity.
The Chinese government doesn't support “massive” short-term stock speculation by insurance companies, the China Insurance Regulatory Commission officials told executives of Evergrande Life Insurance recently, according to a statement on the regulator's microblog. The CIRC urges prudence in investment and prevention of investment risks, the statement said. This comes after UnionPay Co. said at the end of last month that it would bar the use of its credit and debit cards to buy insurance products in Hong Kong other than for accident and medical coverage.
China's exports declined for the seventh straight month in October, according to official data released Tuesday, while figures a day earlier showed the nation's foreign-exchange reserves shrank the most since January. A depreciation of about 4 percent in the yuan this year has cushioned the blow from tepid global demand, but failed to provide any sustained boost to shipments.
To contact the reporter on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net. To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Robin Ganguly, Philip Glamann
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