Hong Kong Stocks Decline Most in a Month on China Data

Hong Kong stocks slid, with the benchmark index capping the biggest decline in almost a month, after data showed China’s new credit fell in March from a year earlier and money supply grew at the slowest pace on record.

Agricultural Bank of China Ltd. lost 2.1 percent. Guotai Junan International Holdings Ltd. tumbled 7.9 percent after the brokerage said it plans to sell shares. Great Wall Motor Co. (2333) sank 5.2 percent after JPMorgan Chase & Co. cut its rating. Hong Kong Exchanges & Clearing Ltd., the world’s second-biggest bourse operator by market value, slipped 5.3 percent after jumping 14 percent in the past two sessions.

The Hang Seng Index (HSI) fell 1.6 percent to 22,671.26 at the close in Hong Kong, erasing gains since plans for cross-border equity trading with Shanghai’s exchange were announced April 10. All but three shares fell on the 50-member gauge amid volume 14 percent lower than the 30-day average. The Hang Seng China Enterprises Index, also known as the H-share index, lost 2.1 percent to 10,028.74. China is due to release first-quarter gross domestic product data tomorrow.

“Investors are using the money supply data as an excuse to take profit and lock in gains ahead of China’s GDP data,” said Louis Tse, a Hong Kong-based director at VC Brokerage Ltd. The money supply data shows not enough liquidity, and “the lower the GDP, the higher the expectation the government will pour money into the market, but that’s already discounted.”

China today reported that aggregate financing was 2.07 trillion yuan ($333 billion) in March, compared with the 1.85 trillion yuan median projection in a Bloomberg News survey of 19 analysts and 2.55 trillion yuan a year earlier. New yuan loans totaled 1.05 trillion yuan.

China Data

M2, the nation’s broadest measure of money supply, rose 12.1 percent in March from a year earlier, compared with the median estimate of 13 percent and 13.3 percent in February. China’s worst slowdown since the global economic crisis is fueling speculation the government will miss its 7.5 percent official expansion target.

Agricultural Bank dropped 2.1 percent to HK$3.30. China Construction Bank Corp., the nation’s second-largest lender by market value, retreated 1.8 percent to HK$5.41. China Citic Bank Corp. (998) and China Minsheng Banking Corp. each lost at least 6.5 percent.

China’s economy expanded 1.5 percent in the first quarter from the previous three months, according to the median estimate in a Bloomberg News survey of economists ahead of tomorrow’s data, down from 1.8 percent in the fourth quarter. That indicates a sharper deceleration than the median projection for 7.3 percent growth from a year earlier, down from 7.7 percent.

Stimulus Outlook

The government should issue policies to stabilize growth in a “timely manner” if quarterly GDP drops below 7 percent, and there’s room to loosen economic policy, Li Ruoyu, a researcher with the State Information Center, wrote in an article published in the Shanghai Securities News today.

Mainland property companies slid. China Resources Land Ltd., the nation’s second-biggest developer by market value listed in Hong Kong, sank 3.2 percent to HK$16.96. China Overseas Land & Investment Ltd. (688) fell 3.6 percent to HK$20.15. China’s property sector may worsen in coming months and developers could start to post sales declines, Morgan Stanley wrote in a note.

The Hang Seng Index is up 2.4 percent this quarter, becoming the top performer for the period among developed markets from second-worst the previous quarter, amid speculation that China will add stimulus to stabilize the economy.

The Hang Seng Index traded at 10.3 times estimated earnings today, compared with 15.6 times for the Standard & Poor’s 500 Index yesterday. The H-share gauge rebounded 9 percent since entering a bear market on March 20.

U.S. Shares

Futures on the S&P 500 dropped 0.1 percent today. The U.S. equity gauge rose 0.8 percent yesterday after data showed retail sales increased the most since 2012 and Citigroup Inc. earnings unexpectedly increased. Retail sales jumped 1.1 percent in March, following a 0.7 percent advance in February, Commerce Department figures showed. Ten of 13 categories, from auto dealers to furniture and clothing stores, showed a pickup.

Hong Kong Exchanges dropped 5.3 percent to HK$141.90 after jumping 14 percent the last two trading days on optimism for cross-border trading with Shanghai’s bourse.

Guotai Junan sank 7.9 percent to HK$4.29. The brokerage said it will sell as many as 160 million shares for gross proceeds of HK$688 million ($88.7 million) to be used for general working capital.

Great Wall dropped 5.2 percent to HK$39.40, while Guangzhou Automobile Group Co. fell 4.2 percent to HK$8.44. JPMorgan cut its rating on the stocks.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

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

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