Most Hong Kong Stocks Decline on Developers, Utilities

Most Hong Kong stocks fell, with the city’s broadest equity measure paring this week’s gain, as utilities fell and developers slid amid concern more cities will take steps to cool the property market.

China Resources Power Holdings Co. (836), a mainland generator facing allegations of overpaying for coal assets, dropped 4.5 percent to lead utilities lower. China Resources Land Ltd., the second-biggest mainland developer traded in Hong Kong, slumped 2.6 percent. Man Wah Holdings Ltd. (1999), a sofa maker that gets half its sales from the U.S., rose 1 percent after Federal Reserve Chairman Ben S. Bernanke said it was too early to decide on an exit to record U.S. stimulus.

About five stocks slid for every two that gained as the Hang Seng Composite Index lost 0.1 percent at the close in Hong Kong, paring the week’s gain to 0.3 percent. The Hang Seng Index rose 0.1 percent to 21,362.42 after dropping as much as 0.6 percent. Volume was 37 percent lower than the 30-day average. The Hang Seng China Enterprises Index of mainland shares fell 0.5 percent to 9,448.51.

“The market is discounting the further slowdown in China’s economy,” said Steven Leung, director of institutional sales at UOB-Kay Hian Holdings Ltd. in Hong Kong. “It’s obvious the government won’t launch large-scale policy to boost the economy in the near term. I’m not too worried about the scaling back of U.S. quantitative easing.”

Growth Outlook

China’s gross domestic product may slow to 6.5 percent in 2014 from 7.5 percent last quarter, BlackRock Inc. said in a media briefing yesterday, while Societe Generale SA said the nation’s growth may disappoint for the next two years.

The Hang Seng Index rebounded 2.7 percent after posting its biggest monthly decline in a year in June, on speculation China may act to ease a deepening slowdown. The government this week reported economic growth slowed a second quarter as factory output weakened.

Shares on the benchmark Hang Seng Index (HSI) traded at 10.16 times estimated earnings, compared with 15.3 times for the Standard & Poor’s 500 Index and 13.36 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Utilities Drop

China Resources Power fell 4.5 percent to HK$16.86, leading declines on the Hang Seng Index. The utility yesterday said it paid a fair price for its 2010 purchase of coal mines in Shanxi. The shares have plunged since the official Xinhua News Agency posted a letter on its website written to the Communist Party’s corruption inspector by a reporter alleging China Resources Power paid about double what another company bid for the assets.

Utilities had the biggest drop on the Hang Seng Index, followed by property developers. China Resources Land dropped 2.6 percent to HK$19.72. China Overseas Land & Investment Ltd. (688), the largest mainland property company traded in Hong Kong, retreated 2.1 percent to HK$20.75.

The housing authority of Guangzhou city, the capital of Guangdong province, held a meeting yesterday to discuss measures to curb real-estate prices, the Xinkuaibao newspaper reported on its website, without saying where it got the information.

Gold Manipulation

Authorities are investigating price manipulation by gold sellers in Shanghai, including at shops operated by Chow Tai Fook Jewellery Group Ltd. (1929) and Chow Sang Sang Holdings International Ltd., the People’s Daily Online reported, citing unidentified persons. Brunswick, the external public relations firm representing Chow Tai Fook, couldn’t immediately comment on the report. Cathy Tam, assistant manager of communications at Chow Sang Sang (116), said the company is not under investigation.

Chow Tai Fook, the world’s biggest jewelery chain, dropped 1.7 percent to HK$9.48. Chow Sang Sang, a retailer of gold and gem-set jewelry, fell 1.2 percent to HK$16.98.

Stimulus Debate

Shares rose earlier after Bernanke yesterday told the U.S. Senate that economic data since the Fed’s June meeting was mixed, and that it was “way too early to make any judgment” on whether tapering of asset purchases will begin in September. Central-bank policy makers have been debating the timing of cuts in $85 billion of monthly bond purchases. Bernanke has said any reduction will be tied to sustainable gains in the labor market and a rise in inflation.

Futures on the S&P 500 fell 0.2 percent today after the U.S. equity index gained 0.5 percent to a record yesterday in New York. Shares rose after earnings from Morgan Stanley and UnitedHealth Group Inc. beat estimates, and jobless claims dropped to the lowest level since early May, the Labor Department said.

Man Wah gained 1 percent to HK$9.36. Techtronic Industries Co. (669), a maker of power tools that gets 73 percent of its sales from North America, increased 3.1 percent to HK$19.14.

Solar Tariffs

GCL-Poly Energy Holdings Ltd., the world’s biggest producer of solar-grade polysilicon, gained 4.3 percent to HK$1.96. The shares surged after China’s government announced plans to impose duties of as much as 57 percent on polysilicon from the U.S. and South Korea. GCL-Poly was also raised to outperform from neutral at Macquarie Research.

AAC Technologies Holdings Inc. (2018), an acoustic-components maker which supplies Nokia Oyj, tumbled 5.7 percent to HK$33.85. Nokia, the Finnish mobile-phone maker attempting a comeback, yesterday reported revenue that missed estimates.

Among other shares that rose, Dongfeng Motor Group Co. (489), which makes vehicles with Nissan Motor Co., climbed 2.6 percent to HK$9.82 after being raised to outperform from underperform at Daiwa Securities Group Inc

Hang Seng Index futures slipped 0.1 percent to 21,334. The HSI Volatility Index rose 0.4 percent to 19.23, indicating traders expect a swing of 5.5 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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