Hong Kong stocks dropped, dragging the city’s benchmark index down to its lowest level since July, as casino companies tumbled on signs of a slowdown in Macau gambling revenue and property developers declined.
Galaxy Entertainment Group Ltd. (27) and Sands China Ltd. (1928) plunged more than 7 percent to lead losses in Hong Kong. Gambling sales growth in Macau slumped to 7 percent in January, the slowest pace since October 2012, according to official data. A gauge of property shares dropped for an eighth day as Cheung Kong Holdings Ltd. (1), the developer controlled by billionaire Li Ka-shing, slid to its lowest level since September.
The Hang Seng Index retreated 0.6 percent to 21,269.38 at the close, with more than two stocks dropping for each that rose. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong, known as the H-share index, declined 0.4 percent to 9,470.62. China’s markets are closed for holidays until Feb. 7.
“Macau’s revenue growth is much weaker than expected,” said Steven Leung, director of institutional sales at UOB-Kay Hian Holdings Ltd. in Hong Kong. “If this is a one-off, it shouldn’t be too big a problem. Otherwise, there is a risk for the whole sector to be downgraded.”
Galaxy Entertainment slumped 7.3 percent to HK$66.25, the steepest drop in more than seven months, and Sands China fell 7.45 percent to HK$54.65, the most since October 2011. MGM China Holdings Ltd. (2282) slid 4.3 percent to HK$28.65 and Wynn Macau dropped 2.9 percent to HK$32.
Casino revenue in Macau increased 19 percent to $45 billion last year, about seven times that of the Las Vegas Strip, helping spur annual gains of more than 80 percent for Galaxy Entertainment and Sands China. That compares with a 2.9 percent advance by the Hang Seng Index in 2013.
The Hang Seng Property Index fell 1.3 percent to its lowest close since August 2012. Barclays Plc, UBS AG and Bank of America Corp. are among strategists expecting a real-estate slump in the city.
Cheung Kong sank 1.5 percent to HK$113.20. Hang Lung Properties Ltd. (101), a Hong Kong-based developer that invests in mainland shopping malls, fell 1.9 percent to HK$21.25, while Wharf Holdings Ltd. decreased 1.6 percent to HK$50.45.
“The uncertainty on property developers is still there,” said Linus Yip, a strategist at First Shanghai Securities Ltd. “Hong Kong property developers are not in a good environment.”
The Hang Seng Index (HSI) has lost 8.7 percent this year and the Hang Seng China gauge has slumped 12 percent, the worst performance after Japan’s Nikkei 225 Stock Average among global benchmark indexes, according to data compiled by Bloomberg.
About $3 trillion has been erased from global equities this year after losses that began with currencies in Turkey and Argentina spread to developed markets. The pace of economic growth in China is among the biggest questions in developing nations and the largest risks for markets, said Bill Gross, who oversees the world’s biggest bond fund at Pacific Investment Management Co.
“I call China the mystery meat of emerging-market countries,” Gross said yesterday during an interview on Bloomberg Television’s “Market Makers” with Erik Schatzker and Stephanie Ruhle. “Nobody knows what’s there and there’s a little bit of bologna, so we’re just going to have to wonder going forward through this year as to the potential problems in China and other emerging markets.”
China’s economy grew 7.7 percent in 2013, the same rate as in 2012. Expansion is forecast to be 7.4 percent this year, the weakest pace since 1990, based on the median estimate in a Bloomberg News survey. Chinese leaders, including President Xi Jinping, have signaled their willingness to sacrifice short-term growth to reduce the economy’s reliance on debt-fueled infrastructure spending and tackle pollution.
Among stocks that gained, China Shenhua Energy Co. (1088), the nation’s biggest producer of the coal, rose 1.8 percent to HK$19.52. Barclays said the nation’s coal sector may have 6 percent earnings growth this year and named the stock as its top pick. Haitong International Securities Group Ltd., a unit of China’s second-largest brokerage, added 2.8 percent to HK$4.06 after saying it expects full-year profit to increase.
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