Hong Kong Stocks Fall Second Day on U.S. Stimulus Concern

Hong Kong stocks fell, with the benchmark index sliding a second day, as stronger U.S. trade data added to concern the Federal Reserve may soon scale back record stimulus.

The Hang Seng Index declined 0.6 percent to 21,795.08 as of 9:31 a.m. in Hong Kong, with six shares falling for each that rose. The Hang Seng China Enterprises Index lost 0.9 percent to 9,562.09. Mainland trade data is due tomorrow.

The Hang Seng Index retreated 3.2 percent this year through yesterday, the only decline among major markets tracked by Bloomberg, amid concern China’s growth is slowing and speculation the Fed will pare bond purchases. The gauge traded at 10.5 times estimated earnings yesterday, compared with 15.4 for the Standard & Poor’s 500 Index.

Futures on the S&P 500 fell 0.2 percent today. The equity gauge lost 0.6 percent yesterday in New York as retailers’ results disappointed and export data fueled concern the Fed may reduce bond purchases this year. The U.S. trade deficit narrowed in June to the lowest since October 2009 as oil imports declined and companies shipped more goods abroad, showing second-quarter growth was stronger than initially estimated.

Fed Bank of Chicago President Charles Evans, who has been among the strongest proponents of record monetary accommodation, said yesterday he “would clearly not rule” out a decision to begin dialing back asset purchases in September.

China Trade

China’s trade growth may continue to slow in the second half, according to a report by the State Information Center published in China Securities Journal. Overseas shipments are expected to have gained 2 percent in July from a year earlier, compared with a 3.1 percent decline the previous month, according to 41 economists surveyed by Bloomberg. Inflation figures are to be released later this week.

The Hang Seng China Enterprises Index, also known as the H-share index, has fallen as much as 27 percent this year from a Feb. 1 high, meeting some investors’ definition of a bear market. The measure traded at 1.16 times the value of net assets yesterday, 34 percent lower than its five-year average of 1.77.

Materials and energy companies led declines this year through yesterday on the Hang Seng Composite Index on concern demand will weaken as China’s economy slows. Utility and information-technology shares were the biggest gainers.

Hang Seng Index (HSI) futures fell 0.5 percent to 21,722. The HSI Volatility Index slid 0.6 percent to 16.05, indicating traders expect a swing of 4.6 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: Sarah McDonald at smcdonald23@bloomberg.net

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