Hong Kong Stocks Slump Most in Six Months on China Data

Hong Kong stocks declined, with the city’s benchmark index sinking the most in six months, after a gauge of China’s services industries fell to a four-month low.

Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, decreased 2.7 percent. Belle International Holdings Ltd. (1880), slumped 5.1 percent to lead declines on the Hang Seng Index (HSI) after Sunwah Kingsway Capital Holdings Ltd. cut its price target on China’s largest seller of footwear. Zhaojin Mining Industry Co., China’s No. 2 gold producer, gained 2.6 percent as the bullion’s price rose to a two-week high.

The Hang Seng Index lost 2.2 percent to 22,817.28 at the close in Hong Kong, its steepest drop since July 3. All but one company on the index fell. Trading volume on the gauge was 38 percent higher than than the 30-day average. The Hang Seng China Enterprises Index (HSCEI) of mainland shares traded in the city, also known as the H-share index, slumped 2.5 percent to 10,436.76.

“The Hong Kong market may experience some pullback for the time being because the growth of China manufacturing and services is slowing,” Linus Yip, a strategist at First Shanghai Securities Ltd., said by phone. “The focus for Hong Kong now is whether the growth rate of China’s economy can still keep up.”

Futures on the Standard & Poor’s 500 Index dropped 0.1 percent today. The gauge slid 0.9 percent yesterday, while the Dow Jones Industrial Average declined 0.8 percent, retreating from their biggest annual rallies in more than 15 years.

China Data

China’s non-manufacturing purchasing managers’ index dropped to 54.6 in December, the lowest since August and down from 56 a month earlier, the National Bureau of Statistics and Federation of Logistics & Purchasing said today. A reading above 50 indicates expansion. Two measures of factory output also decreased last month.

ICBC dropped 2.7 percent to HK$5.06, while Agricultural Bank of China Ltd., the nation’s third-biggest lender, retreated 2.9 percent to HK$3.67.

A manufacturing purchasing managers’ index from HSBC Holdings Plc and Markit Economics fell to 50.5 in December from 50.8 the previous month, while a separate official gauge declined to 51 from 51.4, according to data released this week.

The world’s second-biggest economy may expand 7.5 percent in 2014, Shanghai Securities News reported yesterday, citing an interview with Zhu Baoliang, head of the State Information Center’s economic forecasting department. Chinese lawmakers last year unveiled the largest policy shift since the 1990s, pledging to encourage private investment in state-controlled industries.

Earnings Multiple

The Hang Seng Index traded at 10.1 times estimated earnings today, compared with 15.5 for the S&P 500 yesterday.

Belle International slumped 5.1 percent to HK$8.54 after Sunwah Kingsway cut its price target 16 percent to HK$9, citing adverse impact from counterfeit products and unauthorized dealers.

China Shenhua Energy Co. (1088), the nation’s biggest coal producer, dropped 4.4 percent to HK$22.85 and Yanzhou Coal Mining Co. fell 3.9 percent to HK$6.36 after Jefferies Hong Kong Ltd. said benchmark Qinhuangdao coal prices may collapse.

Among stocks that rose, Zhaojin Mining gained 2.6 percent to HK$4.67, while Zijin Mining Group Co. (2899), China’s largest producer of the precious metal, climbed 2.4 percent to HK$1.72. Gold climbed as much as 1.2 percent to $1,238.93 an ounce on speculation demand for the haven asset will increase in Asia.

To contact the reporter on this story: Jasmine Ng in Singapore at jng299@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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