Bloomberg News

Hong Kong Stocks Decline as Energy, Property Shares Drop

November 13, 2012

(Corrects date of low in fifth paragraph.)

Hong Kong stocks fell, with the benchmark index headed for the lowest close in four weeks, as property companies and energy shares declined.

Shimao Property Holdings Ltd., which develops real estate projects in China, dropped 2.5 percent on concern that the mainland may increase property curbs. China Petroleum & Chemical Corp. (386), the state-backed Chinese refiner, fell 2.6 percent as oil declined for a second day. Industrial & Commercial Bank of China Ltd. led banks lower.

The Hang Seng Index (HSI) fell 0.9 percent to 21,238.27 as of the midday trading break in Hong Kong, with all but five stocks dropping, headed for the lowest close since Oct. 16. Trading volume about equal with the 30-day average for the time of day. The benchmark gauge advanced 18 percent from a June 4 low through yesterday as economic data showed China’s slowdown may be bottoming out and central banks around the globe added stimulus to spur growth.

“Hong Kong has shot up too much and it has a chance to have a significant correction,” said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong. “Data are in line with market forecasts, but I don’t think just one month’s worth is strong enough to convince the market that China has resumed growth.”

The Hang Seng China Enterprises Index (HSCEI) of mainland companies slipped 1.7 percent to 10,271.44, dropping for a fourth day and extending a decline from a five-month high struck on Nov. 2. The measure entered a so-called bull market on Nov. 2 after advancing 20 percent from its low for the year on Sept. 5.

The Hang Seng Index traded at 11.2 times estimated earnings as of yesterday, compared with 13.3 for the Standard & Poor’s 500 Index and 12.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Property Curbs

Chinese developers slid after China will “steadfastly” enforce property controls, the nation’s housing ministry said in a statement. Shimao, which had risen 121 percent this year through yesterday, fell 2.5 percent to HK$14.28, and Agile Property Holdings Ltd. (3383) lost 2.7 percent to HK$9.26.

Energy shares dropped after crude for December delivery slid as much as 50 cents to $85.07 a barrel in electronic trading on the New York Mercantile Exchange. China Petroleum & Chemical, known as Sinopec, dropped 2.6 percent to HK$7.89. PetroChina Co. (857), the nation’s biggest oil and natural gas producer, fell 1.4 percent to HK$10.20.

Chinese banks declined. Industrial & Commercial Bank of China slid 1.6 percent to HK$4.97. China Construction Bank Corp. (939) dropped 1.2 percent to HK$5.69.

China’s money supply gained 14.1 percent in October, missing a median forecast of 14.5 percent, the Beijing-based People’s Bank of China reported yesterday. Also, the nation’s new yuan loans unexpectedly dropped last month from a year earlier.

Futures on the S&P 500 Index lost 0.5 percent today after the U.S. benchmark was little changed yesterday as investors awaited U.S. budget talks. Euro-area finance ministers gave Greece two extra years to cut its budget deficit, pledging to prevent the region’s debt crisis from escalating.

The HSI Volatility Index (VHSI) dropped 0.9 percent to 17.12, indicating traders expect a 4.9 percent swing in the equity benchmark in the next 30 days. Futures on the Hang Seng Index fell 0.9 percent to 21,222.

Of the 49 companies on the Hang Seng Composite Index that have reported quarterly earnings since Oct. 1 and for which estimates are available, 57 percent missed expectations, according to data compiled by Bloomberg.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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


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