Hong Kong’s Hang Seng Index (HSI) fell a second day from a 19-month high as a technical indicator signaled the gauge may have risen too fast, and China Mobile Ltd. (941) led declines among telecommunications shares. Losses were limited on a report China’s manufacturing is expanding.
China Mobile slid 2.2 percent after JPMorgan Securities Ltd. recommended selling the shares. AAC Technologies Holdings Inc., a maker of audio components that supplies Apple Inc. (AAPL:US), fell 6 percent after the iPhone maker reported the weakest sales since 2009. Huabao International Holdings Ltd. slumped 11 percent after the tobacco flavor maker went ex-dividend.
The Hang Seng Index lost 0.2 percent to close at 23,598.90 in Hong Kong. The gauge erased gains of as much as 0.2 percent after North Korea threatened to conduct a nuclear test. The Hang Seng China Enterprises Index (HSCEI) of mainland companies dropped 0.6 percent to 12,095.77.
“We are overdue for a correction,” said Francis Lun, Hong-Kong based managing director at Lyncean Securities Ltd. “Apple’s earnings disappointed investors. Apple’s magic may be fading because you can’t achieve miracles for a decade.”
The benchmark Hang Seng Index has gained more than 4.2 percent this month amid optimism China’s economic slowdown has bottomed. The measure traded at 11.5 times estimated earnings, compared with 13.5 for the Standard & Poor’s 500 Index and 12.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
The Hang Seng’s 14-day relative strength index was above 70 for a fourth day yesterday, with readings higher than that level signaling to some investors that an asset may be poised to fall.
China Mobile declined 2.2 percent to HK$85.05 after its rating was cut to underweight from neutral at JPMorgan. The carrier may post is first negative profit growth in 2013, analysts led by Lucy Liu wrote in note to clients. China Unicom (Hong Kong) Ltd. fell 2.9 percent to HK$12.68.
AAC Technologies (2018) lost 6 percent to HK$28.20 after sales at client Apple fell short of forecasts. Revenue at the Cupertino, California-based company rose 18 percent to $54.5 billion, compared with the the average analyst estimate of $54.9 billion. Shares of Apple tumbled as much 11 percent in after-hours trading.
Huabao International slumped 11 percent to HK$4.31 after the stock went ex-dividend. Yesterday was the last day to buy the shares and collect the current period’s dividend.
Foxconn International Holdings Ltd. slid 5.6 percent to HK$3.38 after saying it will post a full-year loss. The handset maker, which supplies Nokia OYJ, cited falling demand from its main customers.
Lenovo Group Ltd. (992), a maker of personal computers, rose 6.6 percent to HK$8.43, the highest since 2007, after Chief Financial Officer Wong Wai Ming said the company’s smartphone business swung to a profit in China this quarter.
A preliminary index measuring Chinese manufacturing activity rose to 51.9 in January from 51.5, according to HSBC Holdings Plc and Markit Economics. The median estimate of economists surveyed by Bloomberg called for 51.7. Readings above 50 indicate expansion.
Huaneng Power International Inc. advanced 0.4 percent to HK$7.23 to lead utilities higher on prospects for more electricity demand. China Resources Power Holdings added 1.7 percent to HK$20.45.
China’s economic risks have shifted back to growing too quickly as new regional officials try to boost development, Fan Gang, a People’s Bank of China academic adviser from 2006 to 2010, said yesterday in an interview in Davos, Switzerland, where he is attending the World Economic Forum.
The Hang Seng Volatility Index (VHSI) fell less than 0.1 percent to 13.10, indicating options traders expect a swing of 3.8 percent in the next 30 days. Futures on the Hang Seng Index were little changed at 23,607.
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