Bloomberg News

Hong Kong Stocks Decline to Month Low as Chinese Trade Slows

May 10, 2012

Hong Kong stocks fell, with the benchmark index closing at its lowest level in a month, after a weaker-than-expected trade report in China added to evidence the world’s second-largest economy is slowing.

Cosco Pacific Ltd. (1199), which operates port facilities, fell 1.6 percent. PetroChina Co., the nation’s second-largest oil refiner, fell 2.1 percent after regulators cut fuel prices. Cathay Pacific Airways Ltd. (293), Asia’s largest international carrier, slumped 6.3 percent after forecasting “disappointing” earnings.

The Hang Seng Index slid 0.5 percent to 20,227.28, the lowest close since April 11, with almost twice as many stocks declining as advancing. The Hang Seng China Enterprises Index (HSCEI) of mainland stocks, known as the H-share index, dropped 0.7 percent to 10,289.81.

“We are moving into a seasonally slower market and if this kind of data comes in the market may have more downside,” said Tim Leung, who helps manage about $1.5 billion at IG Investment Ltd. in Hong Kong. China’s economic “momentum is not as strong as a lot of people had hoped for.”

Hong Kong’s benchmark index fell 6.7 percent from a peak on Feb. 29 as China’s economy showed signs of a slowdown and on renewed concern Europe’s debt crisis will worsen. Shares on the Hang Seng Index (HSI) traded at 10.3 times estimated earnings on average, compared with 12.9 times on the Standard & Poor’s 500 Index, and 10.4 times for the Stoxx Europe 600 Index.

Trade Slows

Companies that do business overseas declined. Cosco Pacific fell 1.6 percent to HK$10.16. Li & Fung Ltd., the biggest supplier for Wal-Mart Stores Inc., slipped 1 percent to HK$15.72.

China’s overseas shipments rose 4.9 percent from a year earlier, the customs bureau said on its website today. That compares with the 8.5 percent median estimate in a Bloomberg survey of 33 analysts. Import growth of 0.3 percent trailed forecasts for a 10.9 percent gain.

PetroChina dropped 2.1 percent to HK$10.52. China Petroleum & Chemical Corp., also known as Sinopec, declined 1.8 percent to HK$7.73 after the National Development and Reform Commission said on its website yesterday it will cut fuel prices for the first time since October.

Cathay Pacific slid 6.3 percent to HK$12.52, the steepest drop on the Hang Seng. The airline said first-half earnings will be “disappointing” amid weaker passenger and cargo demand.

Among stocks that rose, Esprit Holdings Ltd. (330), a clothing retailer, surged 5.4 percent to HK$14.78, the steepest gain on the Hang Seng Index. The company rose after reporting same-store sales increased 0.5 percent in the three months ended March 31. That follows a 4.6 percent decline in the six months ended Dec. 31.

Hang Seng Index futures expiring this month dropped 1.1 percent to 19,923. The HSI Volatility Index (VHSI) rose 1.1 percent to 22.60, indicating traders expect a swing of about 6.5 percent in the benchmark index during the next 30 days.

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

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net


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