Bloomberg News

Hong Kong Stocks Decline as Fitch, Moody’s Damp Europe Optimism

December 13, 2011

Dec. 13 (Bloomberg) -- Hong Kong stocks fell, sending the Hang Seng Index to a two-week low, after Fitch Ratings joined Moody’s Investors Service in saying last week’s European summit did little to resolve the debt crisis.

Esprit Holdings Ltd., a clothier that counts Europe as its biggest market, slid 2.8 percent. Jiangxi Copper Co., China’s biggest producer of the metal by market value, retreated 1.6 percent after commodity prices dropped and Credit Suisse Group AG cut its rating. Cheung Kong (Holdings) Ltd., a developer controlled by billionaire Li Ka-shing, slid 1.5 percent on speculation property prices in Hong Kong will decline. China Gas Holdings Ltd. surged 20 percent on a buyout bid.

The Hang Seng Index fell 0.7 percent to 18,447.17, its lowest close since Nov. 30. All but eight of 48 stocks on the gauge retreated. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong slid 1 percent to 9,957.15.

“We can’t get an improvement in consumer sentiment and business sentiment unless we start to get some kind of resolution out of Europe,” said Angus Gluskie, who oversees about $300 million at White Funds Management in Sydney. “The euro nations are purely assuming an austerity agenda and they’re failing to consider the equally important aspect, which is to stimulate and encourage economic growth.”

The Hang Seng Index tumbled 20 percent this year as Europe’s crisis drags on global growth. Companies in the gauge traded at 10.1 times forecast earnings, down from 14.4 times on Dec. 31, according to Bloomberg data. The Standard & Poor’s 500 Index trades at 12.5 times.

Europe Summit

Stocks linked to Europe fell, with Esprit dropping 2.8 percent to HK$10.28. HSBC Holdings Plc, Europe’s biggest lender by market value, retreated 0.6 percent to HK$59.75 in Hong Kong.

Futures on the S&P 500 rose 0.2 percent today. The index slid 1.5 percent in New York yesterday after Moody’s said last week’s European summit didn’t produce “decisive” measures to end the crisis. Fitch said the meeting, which produced the fifth agreement in 19 months to fight debt, did little to ease pressure on euro-zone sovereign bond ratings.

Cheung Kong slid 1.5 percent to HK$88.05, and Hang Lung Properties Ltd., a developer that gets most of its revenue from Hong Kong, fell 2.4 percent to HK$22.45. New property prices in the city will fall on a government plan to increase land supply, the Hong Kong Economic Times reported, citing UBS AG analyst Eva Lee.

Commodities Fall

Jiangxi Copper fell 1.6 percent to HK$17.36 after Credit Suisse cut its rating on the stock to “underperform” from “neutral,” citing downside risks to Chinese copper prices. PetroChina Co., the country’s top oil producer, sank 1.2 percent to HK$9.40.

The London Metals Index, a gauge of six commodities including aluminum and copper, retreated 2.5 percent yesterday, while crude oil for January delivery fell $1.64 to $97.77 a barrel on in New York.

Among stocks that rose, China Gas gained 20 percent to HK$3.37. ENN Energy Holdings Ltd. and China Petroleum & Chemical Corp. will make a cash buyout offer for a controlling stake in the piped-gas supplier, China Gas said.

Futures on the Hang Seng Index fell 0.3 percent to 18,439. The HSI Volatility Index lost 4 percent to 28.78, indicating options traders expect a swing of 8.3 percent in the benchmark over the next 30 days.

-- With assistance from Norie Kuboyama in Tokyo. Editors: Jim Powell, 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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