Hong Kong stocks retreated from a seven-week high with China Construction Bank (939) Corp. leading the decline as Singapore’s sovereign wealth fund sold $2.4 billion of mainland lenders’ shares. Stocks also fell as unemployment in Europe climbed to a 15-year high.
China Construction Bank slid 3.1 percent on a report Temasek Holdings Pte. sold $1.6 billion of the lender’s shares. Esprit Holdings Ltd. (330), a clothier that gets about 80 percent of sales in Europe, fell 4.3 percent. New World Development Co. led property companies down after the government sold land in one of the city’s most exclusive areas for less than estimated.
“Temasek is not selling on dips, they are selling on rises, so I think people will not be too bearish on this,” Alex Wong, a director at Ample Capital Ltd., which oversees HK$1 billion ($129 million), said in a telephone interview. He noted that fundamentals of the banks had not changed. “I think the correction will not be too deep.”
The Hang Seng Index (HSI) fell 0.3 percent to 21,249.53, snapping a two-day advance, at the close in Hong Kong. The Hang Seng China Enterprises Index of mainland companies retreated 1.4 percent to 10,987.06.
Trading volume on the benchmark Hang Seng was 246 percent above the 30-day average as trading resumed after a holiday yesterday. More than 7.1 billion shares were traded today, the highest volume in a single day since July 6, compared with the 30-day average of 240 million. Most of the increase was from more than 2.1 billion shares of China Construction Bank changing hands, according to data compiled by Bloomberg.
The Hang Seng has fallen about 2 percent from this year’s peak on Feb. 29 as China targeted the slowest economic growth since 2005 and on renewed concern the euro debt crisis will drive members of the bloc into recession.
Financial shares led declines after Temasek, Singapore’s state-owned investment company, sold $2.48 billion of shares at a discount in Bank of China Ltd. and China Construction Bank, according to a term sheet obtained by Bloomberg News.
China Construction Bank fell 3.1 percent to HK$5.97, while Bank of China slid 3 percent to HK$3.16. Other mainland lenders followed, with Agricultural Bank of China Ltd. dropping 2.5 percent to HK$3.56.
The stake sales come less than a month after the Singapore wealth fund purchased $2.3 billion of shares in Industrial & Commercial Bank of China Ltd., the world’s biggest lender, from Goldman Sachs Group Inc. Bank of China’s and Construction Bank’s Hong Kong-traded shares have risen 10.5 percent and 10.2 percent this year, respectively.
The euro-region jobless rate rose to 10.9 percent in March, the European Union statistics office in Luxembourg said yesterday. That’s the highest since April 1997, according to Bloomberg data.
Esprit fell 4.3 percent to HK$15.68. China Rongsheng Heavy Industries Group Holdings Ltd. (1101), a shipmaker that gets about a third of its revenue from Greece and Germany, slid 2 percent to HK$2.01.
Hong Kong developers also retreated amid reports that the government sold land in exclusive Repulse Bay for HK$1.67 billion, less than analysts expected.
New World Development Co., the Hong Kong property company controlled by billionaire Cheng Yu-tung, slid 1.3 percent to HK9.83. Wharf (Holdings) Ltd., owner of two of the city’s largest malls, retreated 1 percent to HK$46.65.
Stocks also fell after China’s non-manufacturing industries grew at a slower pace in April, a survey indicated. Want Want China Holdings Ltd. (151), the largest mainland maker of rice cakes, dropped 2.5 percent to HK$9.27. China Yurun Food Group Ltd., the country’s second-largest meat-product supplier, slid 1.5 percent to HK$10.28.
Futures on the Standard & Poor’s 500 Index rose 0.1 percent today. The gauge fell 0.3 percent yesterday on a report U.S. companies added the fewest jobs in seven months in April, according to figures released yesterday from ADP Employer Services. The Dow Jones Industrial Average retreated from its highest level since 2007.
Hang Seng futures expiring this month fell 0.4 percent to 21,094. The HSI Volatility Index (VHSI) was unchanged at 18.51, indicating traders expect a swing of about 5.3 percent in the benchmark index during the next 30 days.
Companies on the Hang Seng trade at an average of about 10.8 times estimated earnings, up from 10 times on Dec. 30 while the S&P 500 trades at 13.3 times, according to Bloomberg data.
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