Hong Kong's Stocks Drop for First Week in Three; Developers Lead Decline
Hong Kong stocks fell, dragging down the benchmark index to its first weekly drop in three, as Chinese developers led declines after the nation stepped up measures to cool its property market.
China Overseas Land & Investment Ltd., controlled by the country’s construction ministry, slid 4.8 percent. Foxconn International Holdings Ltd. retreated 4.7 percent after the world’s No. 1 contract maker of mobile-phones posted a worst- than-estimated second-half profit. Imagi International Holdings Ltd., the maker of the “Astro Boy” animated movie, tumbled 41 percent as trading resumed after a one-day suspension.
“Definitely there are bubbles in some parts of the country, but the overheating is still manageable,” Jenny Tian, senior portfolio manager at Springs Capital Ltd., said in a Bloomberg Television interview. “The government has introduced specific measures to cool off speculative demand in the property market.” Tian said she favors banks.
The Hang Seng Index slid 1.3 percent to close at 21,865.26, extending its drop this week to 1.6 percent. That was the gauge’s first weekly decline in three. The Hang Seng China Enterprises Index, which tracks the so-called H shares of Hong Kong-listed Chinese companies, fell 2 percent to 12,557.40.
Shares on the Hang Seng Index are priced at an average 14.5 times estimated earnings, down from 18 times on Nov. 16 when the index closed at its highest level for 2009, according to Bloomberg data. Concern budget deficits in Europe may derail the global recovery and speculation China’s government will tighten money supply have contributed to a 4.7 percent drop in the Hang Seng from its November high.
China’s cabinet raised minimum mortgage rates and down- payment ratios for some home purchases. Down payments for second homes must be at least 50 percent, up from 40 percent, and interest rates can’t be lower than 110 percent of benchmark rates, the State Council said.
China Overseas tumbled 4.8 percent to HK$15.50. China Resources Land Ltd., a state-controlled developer, declined 4.2 percent to HK$15.26. Guangzhou R&F Properties Co., the biggest real-estate company in the southern Chinese city, slid 4.6 percent to HK$11.94.
The Hang Seng Property Index’s 2.8 percent loss was the biggest among the four industry groups tracked by the broader Hang Seng Index.
Foxconn fell 4.7 percent to HK$7.79. The company’s second- half profit was $57.3 million, compared with a loss of $21.1 million a year earlier, according to figures Bloomberg derived from full-year earnings reported by Foxconn yesterday. The median of three analysts’ estimates compiled by Bloomberg was for a profit of $85 million.
Imagi, a maker of computer-generated movies, plunged 41 percent to 14.4 Hong Kong cents after falling as much as 44 percent. Trading resumed after a one-day suspension that followed a 616 percent rally in the previous four days.
Dongfang Electric Corp. advanced 3.7 percent to HK$49.75. The power equipment maker said full-year net income rose to 1.71 billion yuan from a restated 456.4 million yuan.
Futures on the Hang Seng Index slid 1.4 percent to 21,889. All but seven stocks dropped among the measure’s 43 constituents.
To contact the reporter on this story: Hanny Wan in Hong Kong at firstname.lastname@example.org