Bloomberg News

Hong Kong Stocks Decline to Six-Week Low on China, U.S. Data

November 23, 2011

Nov. 23 (Bloomberg) -- Hong Kong stocks fell, with the Hang Seng Index closing at its lowest level in six weeks, after reports showed China’s manufacturing may contract this month and the U.S. economy expanded less than economists estimated.

Li & Fung Ltd., a clothing and toy supplier that gets 65 percent of its sales in the U.S., slid 2.9 percent. Asian Citrus Holdings Ltd., an operator of orange plantations in China, sank 6.6 percent after a report the company sought to sell shares, which was denied by its finance director. Jiangxi Copper Co., China’s biggest producer of the metal, slid 3.8 percent. Esprit Holdings Ltd., the largest clothing retailer listed in Hong Kong, rose 6.3 percent after its chief financial officer bought shares.

The Hang Seng Index fell 2.1 percent to 17,864.43, its lowest close since Oct. 10. All but six stocks fell in the 46- member gauge. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong retreated 2.8 percent to 9,476.15.

“The manufacturing data signals the economy in mainland China is slowing,” said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong. “The stock market may be under some pressure, but it might try to find a support from expectations of easing monetary policy coming out of China.”

The Hang Seng Index tumbled 22 percent this year amid concern slowing economic growth in the U.S. and China, combined with Europe’s spreading debt crisis, will reduce global demand. Companies in the index traded at 9.7 times estimated earnings, down from 14.4 times on Dec. 31, according to Bloomberg data. The Standard & Poor’s 500 Index trades at 12 times.

U.S. Futures

Li & Fung slid 2.9 percent to HK$14.30, while Techtronic Industries Co., a maker of power tools that counts North America as its largest market, retreated 1.1 percent to HK$7.34.

Futures on the Standard & Poor’s 500 Index sank 0.6 percent today. The index dropped 0.4 percent in New York yesterday after the Commerce Department reported U.S. gross domestic product climbed at a 2 percent annual rate in the third quarter, less than economists projected and down from a 2.5 percent prior estimate.

Jiangxi Copper fell 3.8 percent to HK$16.66, while Anhui Conch Cement Co., a maker of the building materials, slipped 3.1 percent to HK$23.25.

China’s manufacturing may contract this month, preliminary data for a purchasing managers’ index shows. The reading of 48 reported by HSBC Holdings Plc and Markit Economics today compares with a final number of 51 last month. A reading below 50 indicates a contraction.

Asian Citrus fell 6.6 percent to HK$4.69 after the Hong Kong Economic Journal reported the company sought to raise about HK$480 million ($62 million) by placing 100 million shares, citing unidentified people. Company Finance Director Eric Sung denied the report.

China Coal Energy Co., a Beijing-based thermal coal producer, declined 5 percent to HK$8.98, the biggest drop in the Hang Seng Index after Sanford C. Bernstein & Co. said it sees China thermal coal prices falling next year on slower power consumption. Yanzhou Coal Mining Co., a mainland producer of the fuel, slid 4.5 percent to HK$17.68.

Esprit gained 6.3 percent to HK$8.91. Chief Financial Officer Chew Fook Aun bought 100,000 shares in the company on Nov. 17 at an average price of HK$9.18, according to data on the website of the Hong Kong exchange.

Futures on the Hang Seng Index slid 2 percent to 17,801. The HSI Volatility Index gained 3 percent to 35.55, indicating options traders expect a swing of 10 percent in the benchmark over the next 30 days.

--Editors: John McCluskey, Nick Gentle

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net


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