Hong Kong Stocks Head for Two-Week Fall on U.S. Deadlock

Hong Kong stocks fell, with the benchmark index heading for a two-week decline, as concern grew that U.S. political deadlock could lead to a recession in the world’s biggest economy.

The Hang Seng Index lost 0.9 percent to 23,013.62 as of 9:32 in Hong Kong, with all but three shares falling on the 50-member gauge. The Hang Seng China Enterprises Index (HSCEI), also known as the H-share index, slid 1.1 percent to 10,395.71. Mainland markets are shut until Oct. 8.

The Hang Seng Index (HSI) last week capped its biggest quarterly gain since March 2012, rising 9.9 percent on better-than-expected Chinese data and after the Federal Reserve unexpectedly refrained from cutting stimulus. Hong Kong’s equity benchmark traded at 11.12 times estimated earnings yesterday, compared with 15.12 for the Standard & Poor’s 500 Index.

Futures on the S&P 500 slid 0.1 percent today. The index fell the most in a month yesterday as the Treasury Department said the government will run out of borrowing authority Oct. 17. It also warned that if lawmakers failed to raise the $16.7 trillion debt limit, a default could lead to a recession as bad as the 2008 financial crisis or worse. Service industries in the U.S. expanded in September at a slower pace than forecast.

U.S. payrolls data won’t be released as scheduled today because of the shutdown. A dearth of economic data caused by the stoppage is making it harder for the central bank to gauge when to start paring a record $85 billion in monthly bond purchases.

Hong Kong’s retail sales by value rose 8.1 percent in August from a year earlier, missing analysts estimates for a 10.1 percent increase. Sales volume rose 7.2 percent, also short of expectations.

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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