Bloomberg News

Hong Kong Stocks Drop After U.S. GDP Unexpectedly Shrinks

January 30, 2013

Hong Kong stocks dropped, with the city’s benchmark index falling from its highest level since April 2011, after the U.S. economy unexpectedly shrank in the fourth quarter.

Li & Fung Ltd. (494), a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., decreased 2.5 percent. China Shipping Development Co. dropped 2 percent after saying full- year profit will fall more than 50 percent. Datang International Power Generation Co. jumped 3.1 percent after the utility said net income in 2012 probably doubled.

The Hang Seng Index (HSI) fell 0.5 percent to 23,705.59 as of 9:56 a.m. in Hong Kong, with almost three shares falling for each that rose. The benchmark equity gauge is heading for a fifth monthly advance, the longest such streak since July 2009, after the U.S. Federal Reserve embarked on a third round of quantitative easing in September and amid optimism China’s economy will continue its recovery.

“Markets have rallied quite high from where it was six months ago,” Jason Teh, who helps manage about $4 billion at Investors Mutual Ltd. in Sydney. “Hopefully we will see a reality check in terms of what the economy is saying, as growth is not all smooth sailing. In the longer term it all really comes down to earnings growth. That always underpins the stock market.”

The Hang Seng China Enterprises Index of mainland companies slipped 1.1 percent to 12,039.11.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

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


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