Hong Kong stocks retreated for a fifth day, the longest stretch since August, after India’s central bank raised interest rates more than estimated, spurring concern that higher borrowing costs globally may slow growth. Foxconn International Holdings Ltd. (2038), Li & Fung Ltd. and China Merchants Holdings International Co. led declines in the Hang Seng Index. (HSI) China Resources Power Holdings Co. jumped 5.3 percent after a unit of the utility said it will develop wind farms in Inner Mongolia.
“The rate increase in India just reminds people that rates are going up,” said Sandy Mehta, the Hong Kong-based chief investment officer for Value Investment Principals. “Oil prices have continued to be high and interest rates are still rising. Those are the two strong headwinds for the market.”
The Hang Seng Index fell 0.4 percent to close at 23,633.25 in Hong Kong, erasing earlier gains of as much as 0.9 percent. The benchmark measure of Hong Kong equities, which was closed yesterday for the Labor Day holiday, slipped 1.7 percent last week. The Hang Seng China Enterprises Index of Chinese companies’ H-shares slumped 0.8 percent to 13,106.54.
The MSCI Asia Pacific Excluding Japan Index dropped the most in three weeks as raw material producers fell and Australia & New Zealand Banking Group Ltd. and Hon Hai Precision Industry Co. posted earnings that missed analysts’ estimates.
India Raises Rates
The Reserve Bank of India lifted the repurchase rate to 7.25 percent from 6.75 percent, according to a statement in Mumbai today. Only seven of 25 economists in a Bloomberg News survey had predicted the move, while the rest expected a quarter-point increase. The central bank boosted the reverse repurchase rate to 6.25 percent from 5.75 percent.
Oil, which touched a 2 1/2-year high yesterday, fell as much as 89 cents to $112.63 a barrel in electronic trading on the New York Mercantile Exchange.
Foxconn International, the world’s largest contract maker of mobile phones, sank 3.9 percent to HK$4.40 for the biggest loss in a month. Taipei-based Hon Hai Precision Industry Co., which owns more than 70 percent of Foxconn, posted a second consecutive quarter of declining profit, missing analysts’ estimates.
Li & Fung, the biggest supplier of clothes and toys to retailers including Wal-Mart Stores Inc., fell 3.4 percent to HK$38.35. China Merchants, which invests in ports, dropped 2.1 percent to HK$35.
Mongolian Wind Farms
PetroChina Co., Asia’s biggest company by market value, slumped 1.4 percent to HK$11 after Goldman Sachs Group Inc. added it to a sell list.
China Resources rallied 6.3 percent to HK$15.20. China Resources New Energy Group Co., a unit of the company, has agreed with the local government of Tongliao to build wind farms that can produce 300 megawatts of electricity in eastern Inner Mongolia, Tongliao’s government said in a statement.
Shanghai Pharmaceuticals Holding Co. plans to sell shares in a Hong Kong public offering at HK$21.80 to HK$26 apiece, according to terms sent to investors. The company will sell $550 million of shares to key investors, including Temasek Holdings Pte., according to the document. The stock was suspended from trading today.