Oct. 20 (Bloomberg) -- Hong Kong stocks fell, deepening a weekly retreat, amid concern an impasse over European bailout talks may hurt a global recovery, while the Federal Reserve said companies grew more pessimistic about the U.S. economy.
Esprit Holdings Ltd., a Hong Kong-listed clothing retailer that gets almost 80 percent of its sales in Europe, plunged 7.8 percent. Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, slumped 4.9 percent and Jiangxi Copper Co. retreated 3.7 percent. Li & Fung Ltd., a supplier of clothes and toys to Wal-Mart Stores Inc., dropped 2.8 percent.
The Hang Seng Index fell 1.8 percent to 17,983.10 at the close of trading in Hong Kong, with declines by all four industry groups and all but six stocks in the 46-member gauge. The measure has lost 2.8 percent this week after China reported the slowest economic growth since 2009 and Germany doused hopes of a quick fix to Europe’s debt crisis. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong dropped 2.7 percent to 9,196.68 today.
“There appears to be growing concern about whether or not European leaders meeting on the weekend will be able to come up with a credible plan,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney. “U.S. economic conditions don’t appear to be getting any better and in fact there’s some risk it might get worse, and so that doesn’t give investors much comfort at all.”
Stocks across the Asia-Pacific region fell after Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of euro-area finance ministers, indicated that an impromptu meeting of European leaders in Frankfurt last night failed to resolve differences ahead of a summit scheduled for this weekend.
The Fed’s Beige Book survey released yesterday showed U.S. companies reported more doubt about the recovery, even as the economy maintained its expansion last month.
Esprit slipped 7.8 percent to HK$10.48, leading exporters lower. Li & Fung lost 2.8 percent to HK$12.60.
Commodity shares also slid after New York-traded crude oil futures lost 2.5 percent yesterday, while copper futures for December delivery dropped 3 percent.
Jiangxi Copper, the biggest producer of the metal, fell 3.7 percent to HK$15, while Aluminum Corp. slumped 4.9 to HK$3.52. Cnooc Ltd., China’s largest offshore energy explorer, declined 3 percent to HK$12.78.
The Hang Seng Index has tumbled 22 percent this year amid concern a U.S. recovery is stalling, and as Europe’s leaders grapple with ways to maximize the firepower of a 440 billion- euro ($605.5 billion) European Financial Stability Facility as the region’s debt crisis threatens to engulf Italy and Spain.
Futures on the Standard & Poor’s 500 Index lost 0.1 percent today. The S&P 500 fell 1.3 percent yesterday, led by losses in Apple Inc. after the maker of iPhones and iPads reported profit that missed analyst estimates.
Futures on the Hang Seng Index fell 1.8 percent to 17,967. The HSI Volatility Index climbed 5.7 percent to 37.82, indicating options traders expect a swing of 11 percent in the Hang Seng Index in the next 30 days.
Industrial & Commercial Bank of China Ltd. dipped 1.2 percent to HK$4.07, leading Chinese financial stocks lower after the nation’s banking regulator said risks stemming from a so- called shadow banking system and private lending must be “strictly controlled.” Bank of China Ltd. fell 1.5 percent to HK$2.63.
China’s central bank will start a second round of investigations into the nation’s private lending and may introduce a monitoring system in the future, the 21st Century Business Herald reported today, citing an unidentified person close to the People’s Bank of China.
“Investors are seeing a clearer picture of the economic slowdown at home and globally, which may lead to market fluctuations,” said Liu Jianwei, a fund manager at Bosera Asset Management Co., which oversees more than $29 billion. “The European crisis will be a major concern for investors.”
China Southern Airlines Co. slumped 1.7 percent to HK$4.11 after China Business News said the aviation regulator cut its forecast for air-traffic growth this year. China Eastern Airlines Corp. slid 3.1 percent to HK$2.54.
--Editors: Jim McDonald, John McCluskey.
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