Hong Kong Stocks Fall as Developers Drop; Chalco Slides

Hong Kong stocks fell, with the Hang Seng Index erasing yesterday’s advance, as Chinese developers slid on concern more property curbs will be introduced. Aluminum Corp. of China Ltd. declined after an announcement it will be removed from the city’s benchmark index.

China Resources Land Ltd., a state-owned developer, fell 3.4 percent on a report some mainland cities may slow home-sale approvals. Aluminum Corp. of China, the nation’s leading supplier of the metal, slid 3.3 percent, while Lenovo Group Ltd., the second-biggest maker of personal computers, increased 3.7 percent on its addition to the Hang Seng Index. Digital China Holdings Ltd. surged 7.7 percent after a trading suspension yesterday and as financial firms including HSBC Holdings Plc recommended shares of the electronics distributor.

The Hang Seng Index fell 0.4 percent to 23,155.03 at the midday-trading break in Hong Kong. About three stocks declined for every two that advanced in the measure, with trading volume about 16 percent above the 30-day average for the time of day. The Hang Seng China Enterprises Index of mainland companies slid 1.4 percent to 11,680.97, headed for its lowest close this year. The Shanghai Composite Index dropped 1.3 percent.

“Investors would like to see whether the new leadership would add any policies to curb home prices,” said Jackson Wong, vice president at Hong Kong-based brokerage Tanrich Securities Co. The Hang Seng China Enterprises Index is following a sell- off of shares listed on the mainland, which are “still at a high point of the recent rally, and investors would like to take profit off the table prior to Chinese New Year,” he said.

New Year

Hong Kong’s market will be shut three days next week for the Lunar New Year holidays, while mainland markets will be closed the whole week. The Hang Seng Index surged 22 percent from the end of August through January, when the gauge capped its longest monthly winning streak since July 2009. Shares rose amid signs of recovery in the U.S. and China, and as central banks around the globe added stimulus.

The gauge traded at 11.3 times average estimated earnings yesterday, compared with 13.7 for the Standard & Poor’s 500 Index and 12.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

January inflation data is due from China’s statistics bureau tomorrow. Consumer prices probably rose 2 percent from a year earlier, decelerating from a 2.5 percent gain a month earlier, according to the median estimate of 35 analysts in a Bloomberg survey.

Futures on the Standard & Poor’s 500 Index dropped 0.1 percent. The gauge rose 0.1 percent yesterday as better-than- estimated earnings outweighed concern over Europe’s debt crisis before a gathering of euro-area leaders.

Property Curbs?

Some of China’s largest cities may slow approvals for sales of housing units in the first half to slow “momentum” in gains, the China Securities Journal reported, without citing anyone.

Measures to curb property prices may be introduced earlier than expected because upward pricing pressure is robust, Kim Eng Securities (HK) Ltd., said in a report today.

China Resources Land slid 3.4 percent to HK$21.10, while Guangzhou R&F Properties Ltd., a builder in the southern Chinese city, declined 5.7 percent to HK$12.92. China Resources Land was the biggest drag on the Hang Seng Index, followed by Aluminum Corp. of China.

Aluminum Corp retreated 3.3 percent to HK$3.51 after Hang Seng Indexes Co. said the company will be removed from the city’s benchmark index effective March 4. Lenovo rose 3.7 percent to HK$8.74 on inclusion to the index.

Digital China

China Foods Ltd. tumbled 14 percent to HK$5.73 after the breadmaker said it expects 2012 profit to drop.

Among stocks that rose, Digital China jumped 7.7 percent to HK$11.54. The company said it requested administrative review Ministry of Finance penalty for bidding violations. The stock was raised to ‘trading buy’ from neutral at CIMB-GK Pte, and boosted to overweight from neutral at HSBC.

Futures on the Hang Seng Index dropped 0.3 percent to 23,170. The HSI Volatility Index rose 0.9 percent to 14.46, indicating traders expect a swing of 4.1 percent for the equity benchmark in the next 30 days.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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