Hong Kong stocks fell, with the city’s benchmark index declining for the first time in four days, as foreign direct investment in China slumped and European leaders delayed a second aid package for Greece.
Esprit Holdings Ltd. (330), a clothier that gets most of its revenue from Europe, slid 1.7 percent. China Construction Bank Corp. (939), the nation’s second-largest lender, fell 1.1 percent. Jiangxi Copper Co., China’s No. 1 producer of the metal, dropped 2.1 percent after metal prices declined. Li & Fung Ltd. (494), a supplier to Wal-Mart Stores Inc., lost 3 percent after minutes of last month’s Federal Reserve meeting showed U.S. policy makers were divided on additional asset purchases to spur economic growth.
The Hang Seng Index declined 0.4 percent to 21,277.28 at the close. The gauge jumped 2.1 percent yesterday to a six-month high as developers surged and China said it will help Europe resolve its debt crisis. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies listed in Hong Kong dropped 0.9 percent to 11,577.36 after commerce ministry data showed foreign direct investment in China fell for a third month in January.
“The risk is in Europe and people are cautious on that,” said Alex Wong, asset-management director at Ample Capital Ltd. in Hong Kong. “There’s some profit taking in Hong Kong, as yesterday the rise was propelled by a short squeeze. You cannot say this is a weak market because we’re only giving back half of the gain yesterday. Many people are buying selectively.”
Hong Kong’s Hang Seng Index rose 15 percent this year as U.S. data signaled strength in the world’s biggest economy and amid speculation China will ease its monetary policy. Shares in the Hang Seng Index (HSI) traded at 10.9 times estimated earnings, compared with 12.9 times for the Standard & Poor’s 500 Index and 10.9 times for the Stoxx Europe 600 Index.
Esprit slid 1.7 percent to HK$14.32, while Hutchison Whampoa Ltd., which gets 53 percent of its sales in Europe, sank 0.8 percent to HK$77.65. Li & Fung fell 3 percent to HK$17.70 and Techtronic Industries Co. (669), a power-tool maker that counts North America as its largest market, dropped 1 percent to HK$9.80.
Futures on the Standard & Poor’s 500 Index dropped 0.3 percent today. The index slid 0.5 percent in New York yesterday as European officials delayed a decision on a 130 billion euro ($170 billion) bailout for Greece until at least Feb. 20 and possibly until after Greek elections later in the year.
U.S. stocks also declined after the release of minutes of the Federal Reserve’s Jan. 24-25 meeting showed a few policy makers said the central bank may soon have to consider more asset purchases, while others said the economic outlook would have to deteriorate first.
China Construction Bank sank 1.1 percent to HK$6.39. Agricultural Bank of China Ltd., the nation’s third-biggest lender by market value, slumped 0.8 percent to HK$3.75.
China’s four biggest banks lent about a combined 30 billion yuan ($4.76 billion) in the first two weeks of February and added 460 billion yuan deposits, the 21st Century Business Herald reported today, without saying where it got the information. That was less than a forecast by China International Capital Corp. that this month’s lending by the four banks would be about 300 billion yuan, in line with last month, according to the newspaper.
Jiangxi Copper fell 2.1 percent to HK$21.50, while Aluminum Corp. of China Ltd., the nation’s No. 1 supplier of the light metal, retreated 2.8 percent to HK$4.17 after the London Metal Exchange Index of prices for six industrial metals including copper and aluminum fell 0.5 percent yesterday. A measure of materials companies had the steepest drop among the 11 industry groups in the Hang Seng Composite Index.
Futures on the Hang Seng Index expiring this month slid 0.9 percent to 21,222. The HSI Volatility Index rose 6.6 percent to 23.05, indicating options traders expect a swing of 6.6 percent in the benchmark index over the next 30 days.
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