The Hang Seng China Enterprises Index (HSCEI) of mainland shares, also known as the H-share index, lost 0.7 percent to 11,009.84 at the close in Hong Kong after jumping 1 percent yesterday. Citic Securities Co. fell 2.5 percent to lead declines on the gauge after the brokerage jumped 6.9 percent yesterday. Greentown China Holdings Ltd. (3900), a Hangzhou-based developer, tumbled on a lower profit outlook. WH Group, the world’s biggest pork supplier, surged 7.4 percent from its initial public offering price.
“We’re still in a consolidation after the recent rally,” said Benjamin Tam, a fund manager who helps oversee about $1.5 billion at IG Investment Management (Hong Kong) Ltd. “China’s economy is still improving, but the momentum is weaker.”
The July reading for an index of China’s services industry by HSBC (5) Holdings Plc and Markit Economics came in at 50, the lowest since the series began in November 2005 and down from 53.1 in June. A report over the weekend showed the government’s non-manufacturing Purchasing Managers’ Index fell to 54.2 in July from 55 in June. A reading above 50 indicates expansion.
The benchmark Hang Seng Index rose 0.2 percent to 24,648.26, with Tencent Holdings Ltd. leading gains at 3.3 percent. Futures on the S&P 500 slid 0.1 percent. The U.S. benchmark index increased 0.7 percent yesterday as Portugal announced a bailout for Banco Espirito Santo SA and Berkshire Hathaway Inc. beat earnings estimates.
Portugal’s central bank took control of Banco Espirito Santo, easing concern that the lender’s woes may spread. Espirito Santo will get 4.9 billion euros ($6.6 billion), the central bank said. Global financial markets were roiled last month after another holding company in the group missed payments on commercial paper.
HSBC, Europe’s biggest bank, rose 1.8 percent to HK$83.55 in Hong Kong. The lender said its first-half pretax earnings fell 12 percent from a year earlier, while predicting a revenue rebound in 2015.
Hang Seng Bank Ltd. (11), a Hong Kong lender controlled by HSBC, slipped 1.4 percent to HK$129.60 after reporting lower first-half profit because of an accounting change and reduced gains from property valuations.
Greentown China tumbled 12 percent to HK$8.55 after the builder said it expects first-half profit will drop by more than 65 percent from a year earlier.
Other developers also slid. China Resources Land Ltd. (1109), the second-biggest mainland developer listed in the city by market value that surged 28 percent last month, slid 3 percent to HK$17.32 today. Wharf Holdings Ltd. retreated 2.4 percent to HK$60.
The H-share gauge entered a bull market last week after rising more than 20 percent from its March low, amid signs China’s economy is stabilizing after policy makers took steps to bolster growth. The gauge traded at 7.7 times estimated earnings today, compared with multiples of 11.4 for the Hang Seng Index (HSI) and 16.2 for the Standard & Poor’s 500 Index (SPX) yesterday.
Hong Kong’s monetary authority continued to intervene in the foreign-exchange market to curb gains in the local currency. The de facto central bank bought $925 million in Hong Kong and New York hours yesterday, data posted on the Hong Kong Monetary Authority Bloomberg page show. That adds to the $8.39 billion it purchased in July, the most since at least October 2012, according to data compiled by Bloomberg.
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