Hong Kong stocks slid a second day, with the equity benchmark heading for its biggest decline in four weeks, as Chinese property companies and raw material producers fell.
China Overseas Land & Investment Ltd. (688), the biggest mainland developer traded in Hong Kong, slipped 1.9 percent on speculation the government will accelerate property-tax trials. Jiangxi Copper Co., China’s largest producer of the metal, dropped 1.7 percent as copper futures headed for a three-day loss. Cnooc Ltd., the nation’s top offshore oil producer, lost 1.5 percent as oil traded near a six-week low.
The Hang Seng Index (HSI) declined 0.8 percent to 23,179.04 at the close, with three shares falling for each that gained on the 50-member gauge. The Hang Seng China Enterprises Index (HSCEI), also known as the H-share index, dropped 1.1 percent to 10,599.15.
“We’ve had a rally the past three months amid positive economic data from China,” said Ben Kwong, Hong Kong-based chief operating officer at KGI Asia Ltd. “We need to have a consolidation. The market is using the ongoing discussions about the U.S. debt ceiling and Fed tapering as an excuse to sell.”
The Hang Seng Index climbed 6.7 percent this month amid signs of mainland economic recovery and after the Federal Reserve unexpectedly refrained from cutting stimulus. The equity benchmark traded at 11.1 times estimated earnings, compared with 15.4 for the Standard & Poor’s 500 Index yesterday. The H-share index entered a bull market this month after rebounding more than 20 percent from a June low.
Chinese developers declined amid concern the government will introduce further measures to cool the real estate market. There’s increased possibility of harsher curbs as home prices are increasing again, David Cui, an analyst at Bank of America’s Merrill Lynch, wrote in a note yesterday.
China will start a second round of property levy training for people working in the taxation system next month, signaling a possible acceleration of tax trials, the China Securities Journal reported, citing unidentified people.
China Overseas Land dropped 1.9 percent to HK$23.45. China Resources Land Ltd. (1109) sank 3.4 percent to HK$22.55. Guangzhou R&F Properties Co. fell 1.7 percent to HK$12.58.
Futures on the S&P 500 fell 0.1 percent. The gauge lost 0.5 percent yesterday as financial shares slumped and investors watched speeches from central bank officials for clues on monetary policy. New York Fed President William C. Dudley and the Atlanta Fed’s Dennis Lockhart said yesterday stimulus is still needed, while Dallas Fed President Richard Fisher said not tapering $85 billion a month in bond purchases harmed the central bank’s credibility.
The Fed is expected to wait until December before taking the first steps in slowing stimulus, after Chairman Ben S. Bernanke maintained the pace of asset purchases last week, according to 24 of 41 economists surveyed Sept. 18-19 by Bloomberg News.
Even as investors focus on the Fed’s policies, political disagreements over funding and the debt limit are rising in Washington. House Speaker John Boehner and his Republican caucus are pushing the federal government closer to a shutdown over funding and the debt limit, Democrats Max Baucus and Patty Murray said in a letter to colleagues yesterday.
Raw-material producers and energy companies declined as copper, aluminum and oil futures fell. Jiangxi Copper dropped 1.7 percent to HK$16. Aluminum Corp. of China Ltd., the nation’s biggest producer of the lightweight metal, slid 1.8 percent to HK$2.74. Cnooc decreased 1.5 percent to HK$15.80.
Tencent Holdings Ltd., China’s biggest Internet company, slipped 1.6 percent to HK$402.60 after Alibaba Group Holdings Ltd. introduced an instant-messaging app to compete against Tencent’s WeChat in the world’s No. 1 smartphone market.
Sunny Optical Technology Group Co. (2382), a supplier of mobile-phone camera lenses to companies including Samsung Electronics Co. and Nokia Oyj, slid 3.6 percent to HK$8.13. The company today said it plans to raise net proceeds of HK$770 million ($99 million), selling 97 million shares at HK$8.06 to Sun Xu Ltd., its biggest shareholder.
Hong Kong Parkview Group Ltd. tumbled 8 percent to HK$3.68. The real estate investor said it may sell as many as 2.3 billion shares to raise funds to pay for the purchase of commercial properties worth HK$14.2 billion from parent Cofco Corp.
Futures on the Hang Seng Index fell 0.7 percent to 23,193. The HSI Volatility Index slid 1.2 percent to 16.46, indicating traders expect the benchmark equity index to swing 4.7 percent in the next 30 days.
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