Hong Kong’s Hang Seng Index, (HSI) the developed world’s worst-performing benchmark gauge this year, capped its first two-week loss since November amid concern that Cyprus won’t stave off a financial collapse.
HSBC Holdings Plc (HSBA), Europe’s biggest lender, slid 1.2 percent. PetroChina Co., the nation’s biggest energy producer, fell 1.4 percent after its full-year profit missed analyst estimates. China Unicom Hong Kong Ltd. (762), the nation’s second-largest mobile-phone company, gained 3.7 percent after its fourth-quarter profit beat analyst estimates.
The Hang Seng Index slid 0.5 percent to 22,115.30 at the close, capping a 1.9 percent drop for the week and a second straight weekly decline. About three stocks fell for every two that rose, with volume 13 percent below the 30-day intraday average. The Hang Seng China Enterprises Index of mainland companies slid 0.4 percent to 10,896.48.
“If something really bad happens in Europe it will be a risk-off situation so it won’t be good for any markets,” said Yoji Takeda, who oversees about $1.5 billion as Hong Kong-based head of Asian equities at RBC Investment Management (Asia) Ltd. “The probability isn’t high but we need to keep an eye on it. Right now we’re in reporting season, so the market is trying to digest some numbers.”
Shares briefly extended losses in afternoon trading after Cyprus Finance Minister Michael Sarris said the island-nation didn’t get financial support it sought from Russia. Sarris said the two will continue to talk, though he must return to Cyprus as “things are getting serious.”
The Hang Seng Index fell 6.7 percent through yesterday from this year’s high in January as Hong Kong and mainland developers slumped amid government efforts to rein in property prices. Shares extended losses this week on concern Cyprus’s need for financial support might reignite Europe’s debt crisis. Hong Kong is the worst-performing market this year, followed by Italy, Greece and Spain.
The measure trades at 10.8 times average estimated earnings, compared with 14 for the Standard & Poor’s 500 Index and 12.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Of the 107 companies listed in Hong Kong that reported full-year earnings so far this month, and for which Bloomberg has estimates, 58 percent exceeded profit expectations. More than 400 companies are scheduled to release their earnings in the coming week, according to data compiled by Bloomberg. China Petroleum & Chemical Corp., the nation’s largest refiner, and China Construction Bank Corp. (939), the world’s No. 2 lender by market value, are among companies scheduled to report sometime after today’s market close.
Hang Seng Index futures slid 0.6 percent to 22,140. The HSI Volatility Index dropped 3.8 percent to 15.56, indicating traders expect a swing of 4.5 percent for the equity benchmark in the next 30 days.
Futures on the S&P 500 (SPX) slid 0.1 percent. The gauge yesterday fell 0.8 percent, with the measure heading for its biggest weekly decline of 2013, after German manufacturing output unexpectedly contracted in March and amid concern that Cyprus might fail to qualify for support.
Cyprus’s lawmakers start debate today on legislation to unlock bailout funds and prevent a financial collapse. The European Central Bank said it may cut Cypriot banks off from emergency funds after March 25. The race for a plan comes after the island’s parliament rejected a tax on bank deposits that was demanded by euro-area countries as a condition for a rescue.
Euro-area finance ministers said they expect “as rapidly as possible” a new proposal from Cyprus on how it plans to raise the 5.8 billion euros needed to trigger emergency loans.
HSBC slid 1.2 percent to HK$83.10, while Esprit Holdings Ltd. (330), a clothier that counts Europe as its biggest market, retreated 1.4 percent to HK$9.47.
PetroChina slumped 1.4 percent to HK$10.24 after saying its profit dropped 13 percent to 115.3 billion yuan ($18.6 billion) last year, missing analyst estimates, as refining losses and import costs outpaced growth in oil and natural gas production.
Tencent Holdings Ltd. (700), China’s largest Internet company, dropped 2.8 percent to HK$245.40 after the company was cut to hold from buy by Deutsche Bank AG on a weak outlook for growth in gaming.
Among stocks that rose, China Unicom jumped 3.7 percent, the biggest gain in the Hang Seng Index, to HK$10.74. Fourth-quarter profit rose to 1.64 billion yuan from 14 million yuan a year earlier, based on figures derived from 12-month earnings the Beijing-based company reported yesterday. Profit surpassed the 1.41 billion-yuan average of eight analyst estimates compiled by Bloomberg.
U.S. Housing, Jobs
In the U.S., data showed sales of previously owned homes rose in February to the highest level in more than three years. Other figures showed applications for jobless benefits during the past month fell to the lowest level since February 2008, while consumers’ views of the economic outlook brightened in March.
Techtronic Industries Co., a power-tool maker that counts North America as its biggest market, rose 4.1 percent to HK$18.42, while AAC Technologies Holdings Inc. (2018), an acoustic components maker that gets half its revenue from the U.S., rose 2.4 percent to HK$32. Yue Yuen Industrial (Holdings) Ltd. (551), a supplier to Nike Inc., rose 1 percent to HK$25.
Li & Fung Ltd. (494), a supplier to Wal-Mart Stores Inc., climbed 1.7 percent to HK$10.74 even after profit declined, as brokerages raised their ratings on the stock.
“The global economy in general is supporting growth,” Takeda said. “The equity market looks promising.”
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