Hong Kong Stocks Decline to One-Week Low on Home Sales, Europe
Hong Kong stocks fell, dragging the Hang Seng Index (HSI) to a one-week low, after the city’s home sales slid and European leaders withheld aid payments to Greece ahead of a referendum on a bailout agreement.
Developer Cheung Kong (Holdings) Ltd., controlled by billionaire Li Ka-shing, fell 3.7 percent. Standard Chartered Plc (STAN), the U.K.’s second-biggest lender by market value, declined 4 percent. Cnooc Ltd. (883), the country’s largest offshore oil producer, retreated 3.7 percent after crude prices declined. Lenovo Group Ltd. (992), China’s biggest maker of personal computers, jumped 3.2 percent after its second-quarter profit surged, beating analyst estimates.
The Hang Seng Index fell 2.5 percent to 19,242.50, its lowest close since Oct. 26. All but two stocks declined in the 46-member gauge. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong dropped 1.4 percent.
“What we will see is not only a hard default of Greece but a breakdown of the euro-zone” should the nation reject the bailout pact, said Francis Lun, managing director at Lyncean Holdings Ltd. “The psychological effect from the financial meltdown will be severe, a pandemonium.” Property in Hong Kong is overpriced, and the market is headed for a drop as developers cut prices, he said.
The Hang Seng Index tumbled 16 percent this year on concern Europe’s debt crisis will spread and China will maintain tight monetary policies. Companies in the index traded at 10.4 times estimated earnings, down from 14.4 times as of Dec. 31, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index is at 12.5 times.
Standard Chartered sank 4 percent to HK$172.80, while Cosco Pacific Ltd. (1199), which has container facilities at Greece’s Piraeus port, slid 5 percent to HK$9.99. HSBC Holdings Plc (HSBA), Europe’s largest bank by market value, fell 2.9 percent to HK$65.50.
Talks ended in Cannes, France late yesterday with German Chancellor Angela Merkel and French President Nicolas Sarkozy withholding 8 billion euros ($11 billion) of assistance and warning Greece it will surrender all European aid if it votes against a bailout package agreed upon last week. China won’t revise its domestic monetary policy, Zhang Tao, director general of the international department of the People’s Bank of China, said in Cannes before a Group of 20 nations summit.
“As to China’s domestic monetary policy, we will not change,” Zhang told reporters.
In Hong Kong, a gauge of developers fell 3.2 percent after the city’s home sales slumped by half in October from a year earlier as buyers put off purchases. Cheung Kong fell 3.7 percent to HK$92. Sino Land Co., a Hong Kong developer controlled by billionaire Robert Ng, dropped 4 percent to HK$10.56 while Henderson Land Development Co., controlled by billionaire Lee Shau-kee, lost 3.9 percent to HK$41.70.
The value of home transactions in Hong Kong last month declined 50 percent to HK$22.5 billion ($2.9 billion), the city’s government said in a statement yesterday.
Cnooc declined 3.7 percent to HK$14.52, while PetroChina Co., the country’s biggest oil producer, dropped 3.8 percent to HK$9.66 after crude futures for December delivery fell as much as 1.8 percent to $90.87 a barrel in electronic trading on the New York Mercantile Exchange today.
Among stocks that rose, Lenovo gained 3.2 percent to HK$5.78 after saying second-quarter profit rose 88 percent to $143.9 million from a year earlier, beating the $119.3 million average of eight analysts’ estimates compiled by Bloomberg.
China Life Insurance Co., the nation’s biggest insurer by market value, gained 3.9 percent to HK$21.15 after Sinolink Securities Co. recommended the industry as potential beneficiaries of a market rebound.
Futures on the Hang Seng Index slid 2.4 percent to 19,292. The HSI Volatility Index jumped 12 percent to 39.26, indicating options traders expect a swing of 11 percent in the Hang Seng Index in the next 30 days.
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