Hong Kong stocks swung between losses and gains as Foxconn International Holdings Ltd. and Chinese developers slid after the government bolstered measures to combat inflation, while Hong Kong property stocks climbed.
Foxconn International, the world’s largest contract maker of mobile phones, slumped 4.6 percent after news it will be dropped from the city’s benchmark share index. China Overseas Land & Investment Ltd., controlled by the nation’s construction ministry, fell 1.2 percent. Sino Land Co., a Hong Kong developer controlled by billionaire Robert Ng, rose 1.1 percent after residential sites sold yesterday for more than expected.
The Hang Seng Index (HSI) increased 0.1 percent to 23,103.67 as of 2:20 p.m. local time, after falling as much as 0.8 percent. The gauge is headed for a 0.3 percent drop for the week. About four stocks fell for every three that gained in the 45-member gauge. The Hang Seng China Enterprises Index of Chinese companies’ H shares gained 0.1 percent to 12,813.38.
“The Asian region has been exhibiting a lack of risk conviction lately, faced with regional tightening fears on inflationary pressure and volatility in high commodity prices,” said Gavin Parry, managing director of Parry International Trading Ltd. in Hong Kong.
Foxconn International slumped 4.6 percent to HK$4.19, the biggest drop in the benchmark, after Hang Seng Indexes Co. said the stock will be removed effective June 7. AIA Group Ltd. and Hengan International Group Co. will be added, it said. Hengan, a manufacturer of personal hygiene products, jumped 3.9 percent to HK$66.
China Overseas Land declined 1.2 percent to HK$14.56, and China Resources Land Ltd. (1109), a state-controlled developer, slid 0.3 percent to HK$13.16.
China’s central bank yesterday raised banks’ reserve requirements for the fifth time this year. The half-point increase takes effect May 18 and will boost levels for the nation’s biggest lenders to a record 21 percent.
“Sentiment remains cautious, and the market doesn’t have any incentive to move higher,” said Ben Kwong, chief operating officer at KGI Asia Ltd.
Through yesterday, the Hang Seng Index fell on all but one trading day since April 26 amid disappointing economic reports and concern China will take more steps to curb inflation. Shares in the gauge traded at an average 12.1 times forecast earnings yesterday, compared with 14.4 times at the end of last year, according to data compiled by Bloomberg.
While Chinese developers fell, Hong Kong property stocks gained. Sino Land rose 1.1 percent to HK$13.50 and Henderson Land Development Co., the builder controlled by billionaire Lee Shau-kee, rose 0.4 percent to HK$52.
Hong Kong’s government yesterday sold three residential sites for more than analysts predicted, boosting confidence that property curbs haven’t damped demand.
“We believe this sends a stronger positive sentiment signal than the previous land auction given the diversity of sites and buyers,” Credit Suisse Group AG said in a report dated today.
Little Sheep Group Ltd. (968), a restaurant operator, soared 25 percent to HK$6.14 after Yum! Brands Inc. offered to take the company private.
Futures on the Hang Seng Index rose 0.7 percent to 23,027. The HSI Volatility Index, the benchmark gauge for Hong Kong stock options, dropped 2 percent to 17.38, indicating options traders expect a swing of 5 percent in the Hang Seng Index in the next 30 days.
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