Hong Kong Stocks Decline on U.S. Stimulus Concern, HSBC Drops
Hong Kong stocks dropped, with the Hang Seng Index (HSI) falling the most in more than a week, after two Federal Reserve officials questioned the amount of stimulus being applied to the world’s biggest economy.
Techtronic Industries Co. (669), maker of Ryobi power tools and Hoover vacuum cleaners, slid 1.3 percent on speculation shipments to the U.S. may fall on signs the recovery is slowing. Li & Fung Ltd., a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., sank 1.3 percent. HSBC Holdings Plc (HSBA), Europe’s largest lender by market value, fell 2 percent after the Wall Street Journal reported U.S. regulators are stepping up scrutiny of European banks operating in the country.
“Markets have been quite volatile given prevailing concerns about Europe’s debt crisis and slowing U.S. economy,” said Hong Kong-based Michiya Tomita, who helps oversee about $65 billion for Mitsubishi UFJ Asset Management Co. “The U.S. still needs government stimulus as it will take time before the economy fully recovers.”
The Hang Seng Index fell 1.3 percent to 20,016.27, its biggest drop since Aug. 9. About four stocks fell for each that rose on the 46-member gauge. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong declined 2 percent to 10,718.46.
Techtronic sank 1.3 percent to HK$7.50, while Li & Fung retreated 1.3 percent to HK$13.34. Esprit Holdings Ltd. (330), a global fashion retailer, dropped 2.3 percent to HK$21.30.
Federal Reserve Chairman Ben S. Bernanke’s pledge last week to keep interest rates near zero until mid-2013 was “inappropriate policy at an inappropriate time,” Charles Plosser, president of the Fed Bank of Philadelphia, said yesterday in a Bloomberg radio interview. Dallas Fed President Richard Fisher said the central bank shouldn’t enact policy to protect stock investors. Both officials dissented from the Fed’s Aug. 9 statement.
HSBC slid 2 percent to HK$68.05, and Standard Chartered Plc, the U.K.’s second-biggest bank by market capitalization, declined 1.4 percent to HK$177.50.
The Hang Seng Index has tumbled 13 percent this year, as the U.S. and European economies showed signs of slowing, raising concern global growth will slow. Shares on the gauge traded at 10.7 times estimated earnings, compared with 12 times for the U.S. Standard & Poor’s 500 Index.
Among stocks that rose, Hong Kong Exchanges & Clearing Ltd., the world’s largest bourse operator by market value, climbed 3.6 percent to HK$147.60 after saying it will enter into talks to form a joint venture with stock exchanges in Shanghai and Shenzhen. It earlier rose as much as 7 percent.
Futures on the Hang Seng Index slid 1.1 percent to 19,934. The HSI Volatility Index rose 3 percent to 30.60, indicating options traders expect a swing of 8.8 percent in the Hang Seng Index in the next 30 days.
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