Bloomberg News

Hong Kong Stocks Fall on PMI Data Ahead of China Congress

March 01, 2013

Hong Kong stocks fell, with the city’s benchmark index dropping the first time in three days, as data showed the pace of China’s manufacturing expansion unexpectedly slowed ahead of a National People’s Congress next week that will set this year’s growth target.

Citic Pacific Ltd., which manufactures steel, slid 5.5 percent for its 10th decline in 12 days. Jiangxi Copper Co. retreated 2.5 percent, pacing declines among resource shares. Sun Hung Kai Properties Ltd. (16) slid 1.9 percent after Hong Kong’s biggest developer cut its home sales target amid government efforts to curb price gains.

The Hang Seng Index lost 0.6 percent to 22,880.22 at the close, trimming the week’s gains to 0.4 percent. About twice as many stocks declined as gained, with trading volume 23 percent above its 30-day average, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index of mainland companies fell 0.8 percent to 11,344.24.

“We are still waiting for the congress,” said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities Ltd. “The major concern is whether there will be more controls coming out.”

The city’s benchmark index has retreated 3.6 percent since the end of January, when it reached a 20-month high, as the city’s government added property curbs and China signaled it may take steps to cool its housing market. The gauge traded at 11.1 times estimated earnings yesterday, compared with 13.7 for the Standard & Poor’s 500 Index and 12.4 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

China PMI

An official Chinese manufacturing index fell for a second month in February, underscoring challenges to economic growth as China’s new government takes power this month after the annual session of parliament.

China Purchasing Managers’ Index was 50.1 in February, compared with 50.4 in January, the National Bureau of Statistics said. The figure for last month compares with economist’s estimates for 50.5.

A separate manufacturing gauge from HSBC Holdings Plc and Markit Economics showed a reading of 50.4, the lowest in four months. The median estimate from 14 analysts for the final level is 50.6. A reading above 50 indicates expansion.

Industrial and resource stocks declined. Citic Pacific fell 5.5 percent to HK$11.26. Aluminum Corp. of China retreated 4.8 percent to 3.19.

Jiangxi Copper slid 2.5 percent to HK$18.12. PetroChina Co., which refines crude oil, slid 1.5 percent to HK$10.50. Coal-supplier Mongolian Mining Corp. (975) fell 1.2 percent to HK$3.28.

Sun Hung Kai

Sun Hung Kai dropped 1.9 percent to HK$117.70 after cutting its home sales target for the year through June to HK$32 billion ($4.13 billion) from HK$35 billion. The city last week doubled a sales tax on all properties over HK$2 million and raised down- payment requirements on some mortgages.

Hang Lung Properties Ltd. declined 3.2 percent to HK$29.10. Cheung Kong (Holdings) Ltd., the city’s second-biggest developer by market value, fell 1.4 percent to HK$118.90.

Hong Kong will scrap an almost decade-old system of selling government-owned land only after receiving guarantees of minimum bids from developers, Secretary for Development Paul Chan said yesterday. The selling will be determined by the government based on the needs of the market to ensure land supply can be increased, he said.

China Life Insurance Co. (2628) dropped 0.6 percent to HK$23.15 after the nation’s biggest insurer said profit probably fell about 40 percent last year on lower investment yields and increased impairment losses due to weakness in capital markets.

Nexon Losses

Cnooc Ltd. (883), a state-owned Chinese offshore energy explorer, sank 2.4 percent to HK$14.88 after Nomura Holdings Inc. cut its rating to reduce from neutral on concern over continued losses at Nexen Inc., which Cnooc bought for $15.1 billion.

Futures on the S&P 500 fell 0.1 percent. U.S. stocks erased gains in the final minutes of trading yesterday as investors prepared for rebalancing of benchmark indexes and the Senate voted to keep $85 billion of spending cuts in place. Hang Seng Index (HSI) futures fell 0.5 percent to 22,853.

The HSI Volatility Index (VHSI) declined 0.7 percent to 15.08, indicating traders expect a swing of 4.3 percent for the equity benchmark in the next 30 days.

To contact the reporter on this story: Eleni Himaras in Hong Kong at ehimaras@bloomberg.net

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


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