Hong Kong Stocks Fall as Chinese Developers Retreat

Hong Kong stocks declined, with the Hang Seng Index falling for the first time in four days, as Chinese property developers and retailers declined.

Shimao Property Holdings Ltd., the Chinese developer controlled by billionaire Hui Wingmau, slipped 2.4 percent on concern property sales slumped last week. Luk Fook Holdings International Ltd. fell 1.5 percent, pacing declines among mainland retailers as retail sales in China rose at the slowest pace since 2009 during the Lunar New Year holidays. SCMP Group Ltd., the publisher of South China Morning Post, halted its stock from trading in Hong Kong after it jumped the most in more than 15 years.

Hong Kong’s Hang Seng Index fell 0.3 percent to 23,381.94 at the close, with three companies falling for every two that gained. Trading volume was about 40 percent below the 30-day average for the time of day, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index, a gauge of mainland Chinese companies, lost 0.9 percent to 11,735.22. Mainland equity markets reopened after the week-long Chinese new year holiday.

“We are entering a seasonally weaker period,” said Tim Leung, a portfolio manager who helps oversee about $1.5 billion at IG Investment Ltd. in Hong Kong. “Valuations and monetary policy are still supportive but markets ran hard.”

The Hang Seng Index is trading within two percentage points of its highest level since April 2011, which was reached on Jan. 30. The gauge soared 22 percent from the end of August through January as data showed the U.S. and Chinese economies are recovering amid stimulus from central banks.

Index Futures

Futures on the Hang Seng Index slid 0.4 percent to 23,333. The HSI Volatility Index gained 1.9 percent to 14.41, indicating traders expect a swing of 4.1 percent for the equity benchmark in the next 30 days.

Exchange-traded funds that attempt to mirror movement of mainland Chinese listed shares fell. The CSOP FTSE China A50 ETF, which tracks the largest 50 China A-share companies, declined 1.7 percent. The ChinaAMC CSI 300 Index ETF, tracking the CSI 300 Index of shares in Shanghai and Shenzhen, lost 1.6 percent.

Futures on the Standard & Poor’s 500 Index were little changed today after the measure slid 0.1 percent on Feb. 15. U.S. markets are closed today for the Presidents’ Day holiday. Industrial production in the U.S. unexpectedly fell 0.1 percent in January as factories took a breather after the biggest back- to-back gain in three decades.

Li & Fung Ltd., the Hong Kong-based supplier to Wal-Mart Stores Inc., slid 0.8 percent to HK$10.12. Wal-Mart posted its biggest share-price decline since Dec. 12 on Feb. 15 after internal e-mails reported the worst sales start to a month in seven years.

‘Total Disaster’

“In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, Wal- Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my about 7 years with the company.”

Mainland developers dropped after Shanghai UWin Real Estate Information Services reported today that new home sales in the Chinese city declined 79 percent in the week ended Feb. 17.

Shimao Property fell 2.4 percent to HK$15.60. Sino Ocean Land Holdings Ltd. sank 2.8 percent to HK$5.51. China Overseas Land & Investment Ltd., the biggest Chinese real estate company traded in Hong Kong, fell 1.1 percent to HK$22.70.

Chinese Retailers

Chinese retailers dropped. Sales at shops and restaurants monitored by China’s Ministry of Commerce increased 14.7 percent in the Feb. 9 to Feb. 15 period from the year-earlier break to 539 billion yuan ($86 billion), the ministry said. That was down from a 16.2 percent pace in 2012, and the least since a 13.8 percent gain in 2009, according to previously released figures.

Luk Fook Holdings declined 1.5 percent to HK$26. Chow Tai Fook Jewellery Group Ltd., the world’s biggest jeweler by market value, slid 0.8 percent to HK$11.84. Chow Sang Sang Holdings International Ltd. decreased 2.1 percent to HK$21.25.

China Shenhua Energy Co., the nation’s biggest producer of the fuel, retreated 1.8 percent to HK$30.25. China Coal Energy Co. lost 2 percent to HK$7.99. Investors may be selling coal producers amid speculation China will enact measures to improve air quality in cities, according to Hong Kong-based UOB Kay Hian Ltd. analyst, Helen Lau.

SCMP Jumps

Trading of SCMP Group was halted after the stock soared the most since October 1997. The shares last traded 23 percent higher at HK$2.15 on volume that was more than 20 times the three-month average.

The company plans to make “an announcement in relation to unusual price and trading movements and inside information,” it said in a filing today, without elaboration. Jennifer Shay, a spokeswoman for the Hong Kong-based publisher, didn’t respond to an e-mail and phone call for response.

SCMP, which produces Hong Kong’s only paid-for English- language daily newspaper, surged as much as 31 percent amid speculation its largest shareholder, billionaire Robert Kuok’s Kerry Media Ltd., could be planning to take the company private or sell it. The publisher is in danger of being delisted later this month because the proportion of shares held by minority investors may drop below a minimum requirement.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; Jonathan Burgos in Singapore at jburgos4@bloomberg.net

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

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