Hong Kong stocks fell for a sixth day after growing financing costs in Italy renewed concern Europe will fail to contain its debt crisis, and as data showed China manufacturing may contract for a second month.
Esprit Holdings Ltd. (330), a clothier that counts Europe as its biggest market, fell 2.1 percent. Cnooc Ltd. (883), China’s largest offshore energy explorer, retreated 5 percent after commodity prices declined. Chow Tai Fook Jewellery Group Ltd. and New China Life Insurance Co., the nation’s third-biggest life insurer, plunged on their trading debuts.
The Hang Seng Index declined 2.2 percent to 17,949.59 as of 10:51 a.m. local time, falling for the sixth day and set for its longest losing streak since Aug. 9. The volume of stocks traded was 11 percent lower than the average over the past 100 sessions, according to Bloomberg data. All but one stock in the 48-member gauge slid.
“The European situation isn’t giving a favorable atmosphere,” said Yoji Takeda, who manages about $1.1 billion at RBC Investment Management (Asia) Ltd. in Hong Kong. “Investors seem to be cautious and on the sidelines. We’re almost into the holiday season so the volume is limited, and under that situation market will tend to be more volatile.”
The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong sank 2.7 percent to 9,620.49 as preliminary results from HSBC Holdings Plc and Markit Economics showed the nation’s manufacturing may contract for a second month in December. The reading of 49 for the purchasing managers’ index compares with a final number of 47.7 for November. The dividing line between contraction and expansion is 50.
Shares also fell after China’s Ministry of Commerce said foreign direct investment fell last month from a year earlier, the first decline since 2009.
The Hang Seng Index tumbled 20 percent this year through yesterday as Europe’s debt crisis damped investor confidence in a global economic recovery. Companies in the gauge traded at 10 times forecast earnings, down from 14.4 times on Dec. 31, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index trades at 12.2 times.
Futures on the S&P 500 (SPXL1) dropped 0.2 percent today. The index dropped 1.1 percent in New York yesterday after Italy sold 3 billion euros ($3.9 billion) of five-year notes yielding 6.47 percent, the highest since May 1997. German Chancellor Angela Merkel said yesterday there’s no quick solution to the debt crisis.
Chow Tai Fook fell 7.1 percent to HK$13.94 after raising HK$15.8 billion ($2 billion) in its initial public offering. New China Life sank 7.7 percent to HK$26.30 after selling $1.9 billion of shares near the bottom of its price range.
“With the uncertain outlook of the macro economy, it’s difficult to ask investors to invest in newly listed stocks (HSI),” said Alex Au, Hong Kong-based managing director of Richland Capital Management Ltd., which oversees $300 million. “The overall market condition has been very weak, so demand for these initial public offerings was poor in the first place.”
Futures on the Hang Seng Index fell 1.9 percent to 17,915. The HSI Volatility Index increased 1.3 percent to 28.30 today, indicating options traders expect a swing of 8.1 percent in the benchmark over the next 30 days.
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