Hong Kong stocks fell, with the city’s benchmark index falling to near a 10-week low, after China’s leaders failed to give details about a policy shift after a summit to discuss reform and amid bets the Federal Reserve will cut stimulus sooner than expected.
The Hang Seng Index dropped 1.1 percent to 22,645.14 as of 9:33 a.m. in Hong Kong, headed for the lowest since Sept. 5. The Hang Seng China Enterprises Index lost 1.6 percent to 10,395.00. Dallas Fed President Richard Fisher said in Melbourne yesterday that monetary accommodation “becomes riskier by the day.”
“Everyone is suffering from scant detail on China, which makes it difficult to draw any conclusion,” said Donald Williams, Sydney-based chief investment officer at Platypus Asset Management Ltd., which oversees about $1.5 billion. “Tapering is obviously back on the agenda as data in the U.S. continues to be strong.”
The Hang Seng Index (HSI) has advanced 16 percent from this year’s low on June 24 through yesterday amid signs China’s economy is stabilizing. Hong Kong’s benchmark index traded at 10.94 times estimated earnings yesterday, compared with about 16 for the Standard & Poor’s 500 Index yesterday.
China elevated the role of markets in the nation’s economic strategy after President Xi Jinping oversaw a gathering of Communist Party leaders while stopping short of providing details and making scant mention of financial reforms. The document from the meeting of the party’s 18th Central Committee didn’t discuss specific issues such as regional borrowing, interest rates or the one-child policy, while referring generally to giving farmers more property rights.
Futures on the S&P 500 fell 0.1 percent today. The gauge yesterday slid 0.2 percent as earnings and an improving economy fueled speculation stimulus will be reduced next month. The Fed may start tapering in March, with analysts surveyed by Bloomberg on Nov. 8 expecting monthly bond purchases to fall to $70 billion from $85 billion.
Investors will scrutinize reports this week on U.S. jobless claims and manufacturing in the New York area. Data last week showed the economy grew faster than forecast in the third quarter and hiring rose more than estimated in October. The HSI Volatility Index, which measures the cost of options on the Hong Kong equity gauge, rose 0.4 percent to 16.21, gaining a eighth day, the longest such streak since 2001.
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