Hong Kong stocks fell, with the city’s benchmark equity index falling for the first week in three, after data showed China’s inflation accelerated more than expected, limiting prospects for further policy easing.
China Resources Land Ltd. (1109), a state-controlled developer, lost 0.9 percent on speculation faster price gains will keep the government from relaxing property curbs. Cnooc Ltd., China’s biggest offshore energy explorer, slipped 1.9 percent. L’Occitane International SA climbed 1.8 percent after shares of the French cosmetics maker were recommended by Deutsche Bank AG.
The benchmark Hang Seng Index (HSI) lost 0.4 percent to 23,264.07 at the close of trading in Hong Kong, dropping 0.3 percent for the week. The Hang Seng China Enterprises Index of mainland companies lost 0.7 percent to 11,842.59. About three stocks fell for each that rose on the Hang Seng Composite Index (HSCI), which lost 0.6 percent.
“The China inflation numbers which were higher than expected mean people cannot expect the Chinese central bank to do any more loosening in the near term,” said Steven Leung, a Hong Kong-based institutional sales director at UOB Kay Hian Ltd. “The market will stay quite conservative in these situations. But overall the market is quite positive as news flow from China remains on the positive side.”
Hong Kong’s benchmark index surged 23 percent last year amid signs China’s economy is improving and as central banks around the globe added stimulus. Shares on the measure traded at 11.3 times estimated earnings yesterday, compared with 13.3 for the Standard & Poor’s 500 Index and 10.9 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Property stocks led declines in Hong Kong on speculation there will be less room for monetary easing after consumer prices rose at the fastest pace in seven months in December.
China Resources Land sank 0.9 percent to HK$22.65 today. Guangzhou R&F Properties Ltd., a builder in the southern Chinese city, declined 3 percent to HK$14.10. Agile Property Holdings Ltd. (3383), which gets all its sales from the mainland, slipped 3.1 percent to HK$11.24.
Among other stocks that fell, China Cosco Holdings Co. (1919), a shipping company, slid 3.6 percent to HK$4.56. Cnooc slipped 1.9 percent to HK$16.22. China Construction Bank Corp. lost 0.8 percent to HK$6.46.
China’s consumer price index rose 2.5 percent in December from a year earlier as cold weather drove up vegetable prices, the National Bureau of Statistics said today in Beijing. That compares with the 2.3 percent median estimate in a Bloomberg News survey of 42 economists and a 2 percent gain in November.
December inflation points to tighter monetary policy, a stronger currency to curb imported inflation, less liquidity and higher rates in the second half of the year, said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB.
Among stocks that rose, L’Occitane International SA climbed 1.8 percent to HK$25.80. The cosmetics company was rated “new buy” by Deutsche Bank on earnings growth.
The HSI Volatility Index climbed 2 percent to 13.92, indicating traders expect the benchmark to swing 3.9 percent in the next 30 days.
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