Hong Kong stocks fell, with the benchmark index headed for its first weekly drop in five, amid weakening optimism U.S. budget negotiations will succeed after House Republican leaders canceled a vote on a budget proposal.
Techtronic Industries Co. (669), a maker of power tools that counts North America as its biggest market, sank 0.9 percent. Cnooc Ltd., a state-owned Chinese offshore energy explorer, declined 1.1 percent after crude futures declined today. Ju Teng International Holdings Ltd., a maker of notebook computer casings, gained 4.2 percent after saying it expects an increase in full-year profit.
The Hang Seng Index slid 0.6 percent to 22,535.16 as of 10:07 a.m. in Hong Kong, headed for its steepest decline since Dec. 3. Four stocks fell for each that advanced on the 50- company measure, with volume 14 percent below the 30-day average, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index of mainland companies sank 0.6 percent to 11,289.22.
“It’s cutting it quite close,” said Shane Oliver, Sydney- based head of strategy at AMP Capital Investors Ltd., which has almost $130 billion under management. “If they go off the fiscal cliff, the U.S. economy could go into a recession. At stake is the U.S. economy and by implications the global economy.”
Hong Kong’s benchmark index advanced 23 percent this year through yesterday amid optimism China’s economy is bottoming out, and as central banks from the U.S., Europe and Japan announced stimulus to boost growth. Shares on the measure traded at 11.9 times average estimated earnings yesterday, compared with 13.9 for the Standard & Poor’s 500 Index and 12.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Futures on the Hang Seng Index (HSI) retreated 0.5 percent to 22,514. The HSI Volatility Index (VHSI) jumped 9.5 percent to 17.17, the biggest increase since July 23, indicating traders expect a swing of 4.9 percent for the equity benchmark in the next 30 days.
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