The Hang Seng Index slid 1.2 percent to 21,313.76 as of 9:33 a.m. in Hong Kong, headed for its lowest close since Feb. 5. The Hang Seng China Enterprises Index (HSCEI), also known as the H-share index, lost 1.1 percent to 9,260.35, approaching a 20 percent decline from a Dec. 2 peak that some traders would consider a bear market. The Federal Reserve yesterday reduced bond purchases by $10 billion to a $55 billion monthly rate.
The H-share measure is down 13 percent this year through yesterday as Chinese data including credit growth, industrial production and exports signaled a slowdown in the world’s second-largest economy. The measure traded at 6.4 times estimated earnings yesterday, compared with 9.8 for the Hang Seng Index and 15.8 for the Standard & Poor’s 500 Index.
Goldman Sachs Group Inc. cut its estimate for China’s gross domestic product growth this year to 7.3 percent from 7.6 percent, and reduced its first-quarter growth forecast to 5 percent from 6.7 percent. Growth will pick up during the year as external factors and domestic policy turn more supportive, Goldman strategists led by Li Cui wrote in a note. The nation’s official 2014 expansion target is 7.5 percent, after rising 7.7 percent last year, the same pace as in 2012.
Of the 80 companies that reported annual earnings in Hong Kong this month for which Bloomberg has estimates, 59 percent exceeded analyst estimates. More than 400 companies are scheduled to report results through next week, according to data compiled by Bloomberg.
Futures on the S&P 500 (SPX) fell 0.2 percent today after the gauge dropped 0.6 percent yesterday. Fed Chair Janet Yellen said the quantitative-easing program used to stimulate the U.S. economy would end this fall should the central bank continue to taper in measured steps. There will be “considerable time” between the end of the stimulus and the first rate increase, meaning “six months or that type of thing,” she said.
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