(Bloomberg) -- Hong Kong stocks built on a one-month high as casino operators and PetroChina Co. led gains. Mainland developers extended last week's advance.
The Hang Seng Index rose 0.3 percent to 22,558.69 at the close. Casino operators Galaxy Entertainment Group Ltd. and Sands China Ltd. climbed at least 2.7 percent on optimism about the outlook for gaming revenue in Macau over the upcoming Lunar New Year holiday. PetroChina Co. capped a 14-month high. The Shanghai Composite Index advanced 0.5 percent.
Hong Kong stocks are up more than 2.5 percent this year, after ending 2016 little changed, as China's economy showed signs of resilience and the offshore yuan jumped. PetroChina and China Petroleum & Chemical Corp. have led gains in the city's shares as the stocks caught up with a rebound in oil prices and investors speculated the government will push through measures to make state enterprises more efficient.
"Reform expectations are helping" energy companies, said Tony Liu, an analyst at Huatai Securities Co. based in Hong Kong. "There could be further asset sales by PetroChina as China pushes forward reforms, resulting in one-off returns, healthy cash flow and a possibly higher dividend payout."
Galaxy Entertainment jumped 4.3 percent to lead gains on the Hang Seng Index. Wynn Macau Ltd. rose 3 percent, while Sands China gained 2.7 percent. Investors are relieved as China's capital controls have been aimed at foreign investments instead of tourism spending, while Macau is expected to see solid visitors during the upcoming holiday, said Alfred Lau, an analyst at Bocom International Holdings Co. based in Hong Kong.
Developers traded in Hong Kong climbed for a seventh day, the longest advance in four months. China Resources Land Ltd. rose 1 percent, extending last week's 3.8 percent rally. China Overseas Land & Investment Ltd. advanced 1.4 percent. Citigroup Inc. analysts Oscar Choi and Marco Sze named the company a top pick in a China property report Friday, saying leading developers are likely to increase market share and sustain growth this year.
- Pou Sheng International (Holdings) Ltd. tumbled 22%, the most since its 2008 IPO, after the sportswear retailer said it fired its chief financial officer for approving incorrect sales records. Yue Yuen Industrial (Holdings) Ltd., which holds a 62% stake in Pou Sheng, fell 6.9%, the most since October.
- Chinese defense stocks rallied as investors bet on reform measures after China South Industries Group Corp. announced it will open up to private investment; AVIC Aircraft Co. rose 5.3%, most since Aug. 8; China Shipbuilding Industry Co. advanced 4.3%; satellite builder China Spacesat Co. gained 4%; China Avionics Systems Co. rose 3.8%.
- Gas operators advanced. Tony Fei, an RHB analyst in Kuala Lumpur, predicted policy makers may boost natural gas in attempt to curb air pollution; China Resources Gas rose 6.2%; China Gas Holdings Ltd. gained 5.3%, ENN Energy Holdings Ltd. advanced 4.2%, Beijing Enterprises Holdings Ltd. rose 1.3%; the HSCEI Index fell 0.1%.
- China Agri-Industries Holdings Ltd. rose 11% after saying it swung to a profit of HK$1.4 billion ($180.5 million) last year from a loss.
- Yingde Gases Group Co. rose 16%, most since Dec. 2015, after receiving a letter of interest from Air Products & Chemicals Inc.
- ZTE Corp. fell 3.4% after Reuters reported it is cutting about 3,000 jobs, citing unidentified people who work at the company.
To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net, 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, Sarah McDonald
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