Bloomberg News

Hong Kong Stocks Decline as U.S. Confidence Unexpectedly Falls

February 01, 2012

Feb. 1 (Bloomberg) -- Hong Kong stocks fell after U.S. consumer confidence trailed economists’ projections and Chinese manufacturing growth stoked speculation the mainland may not ease lending curbs.

Li & Fung Ltd., a supplier of toys and clothing to Wal-Mart Stores Inc., fell 1.8 percent. Cheung Kong (Holdings) Ltd., a developer controlled by billionaire Li Ka-shing, slid 0.9 percent. Sands China Ltd. gained 0.8 percent after Macau gambling revenues jumped 35 percent in January.

The Hang Seng Index lost 0.3 percent to 20,333.37 at the close in Hong Kong. The gauge gained 11 percent last month amid signs the U.S. economy is improving and expectation China will lower lending restrictions to boost growth. The Hang Seng China Enterprises Index of mainland companies listed in the city slid 0.4 percent to 11,253.80 today.

“Looking for the next big leg up in this market is quite challenging,” said Andrew Pease, Sydney-based chief strategist for the Asia-Pacific region at Russell Investment Group, which manages $150 billion. “The prospects for the U.S. economy aren’t that great and earnings are going to be lackluster this year.”

Consumer confidence in the U.S. fell as gasoline prices picked up and more Americans said jobs were hard to get. The Conference Board’s confidence index fell to 61.1 from a revised 64.8 reading in the prior month, figures from the New York-based research group showed.

Li & Fung slid 1.8 percent to HK$16.66. Techtronic Industries Co., a maker of Ryobi power tools and Hoover vacuum cleaners that counts North America as its largest market, slipped 0.1 percent to HK$8.61.

China Policy Easing

China’s manufacturing unexpectedly expanded last month, suggesting the world’s second-biggest economy is weathering Europe’s debt crisis. The purchasing managers’ index rose to 50.5 from 50.3 in December, the statistics bureau said in a statement today. That compares with a median estimate of 49.6 in a Bloomberg News survey of 17 economists. A reading above 50

Stronger-than-expected Chinese manufacturing reduces the need for “aggressive” monetary-policy easing, Fan Cheuk Wan, head of Asia-Pacific research at Credit Suisse Private Banking, said in an interview on Bloomberg Television in Hong Kong.

Cheung Kong dropped 0.9 percent to HK$103.50. Swire Pacific Ltd., the Hong Kong company with interests spanning real estate, aviation and marine services, retreated 3.4 percent to HK$83.30. Sino Land Co. slipped 3.6 percent to HK$12.46.

Property Prices

Developers also declined on speculation property prices will keep falling. They have slid 6 percent since June and may fall as much as 25 percent by 2013, according to Andrew Lawrence of Barclays Capital.

The Hang Seng Index tumbled 20 percent last year amid concern China would continue to curb lending and Europe would fail to resolve its debt crisis.

Sands China, Asia’s biggest casino operator by market value, gained 0.8 percent to HK$26.45 after Macau gambling revenues jumped 35 percent in January. The number beat analyst estimates as Chinese tourists spent more during the Lunar New Year holiday.

SJM Holdings Ltd., a casino company founded by billionaire Stanley Ho, increased 2 percent to HK$14.16. Galaxy Entertainment Group Ltd. rallied 1.8 percent to HK$17.22.

Futures on the Hang Seng index advanced 0.1 percent to 20,378 today. The HSI Volatility Index dropped 0.6 percent to 23.49 today, indicating traders expect a swing of 6.7 percent on the benchmark over the next 30 days.

--With assistance from Jonathan Burgos in Singapore. Editors: Jason Clenfield, Jim Powell

To contact the reporter on this story: Eleni Himaras in Hong Kong at ehimaras@bloomberg.net

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


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