Hong Kong H-Shares Decline From Year’s Highest Close

Hong Kong stocks fell, with a gauge of Chinese shares listed in the city sliding from its highest close this year, as investors weighed earnings and coal producers led declines. Casino companies advanced.

China Coal Energy Co. and New China Life Insurance Co. lost 3 percent, leading declines on the Hang Seng China Enterprises Index. (HSCEI) Tencent Holdings Ltd. (700) was the biggest drag on the benchmark Hang Seng Index as the Internet company was downgraded at HSBC Holdings Plc after posting results. Casino-operator SJM Holdings Ltd. jumped 3.4 percent as earnings beat estimates.

The Hang Seng China Enterprises Index, also known as the H-share index, slid 1.1 percent to 11,075.11 at the close in Hong Kong after ending yesterday at its highest since December. The gauge gained 3.3 percent this week through yesterday. The Hang Seng Index (HSI) today lost 0.4 percent to 24,801.36 after gaining as much as 0.3 percent.

“Market sentiment was quite good yesterday but we’re seeing some correction pressure today,” said Kenny Tang, general manager of AMTD Financial Planning Ltd. “This is quite reasonable.”

Shares reversed losses in late trading yesterday as weaker-than-expected China new credit and industrial output boosted optimism policy makers would add stimulus to support growth. The H-share gauge rose 20 percent from this year’s low in March and traded at 7.7 times estimated earnings, compared with 11.5 for the Hang Seng Index and 16.3 for the Standard & Poor’s 500 Index (SPX) yesterday.

China Coal

China Coal Energy, the nation’s second-largest producer of the fuel, slid 3 percent to HK$4.87. New China Life Insurance Co. retreated 3 percent to HK$28. China Telecom Corp. (728) declined 2.4 percent to HK$4.14 after gaining 2.4 percent yesterday on a report the mainland’s biggest telecommunications operators are drafting reform plans to open up to private investment.

Futures on the S&P 500 were little changed today. The U.S. benchmark index climbed 0.7 percent yesterday as a slowdown in retail sales boosted optimism the Federal Reserve won’t raise rates sooner than anticipated. Central bank Chair Janet Yellen has said the benchmark interest rate will remain low for a “considerable time” after its bond-buying program ends.

Tencent slid 2.3 percent to HK$130.10. While Asia’s biggest Internet company posted a 59 percent surge in quarterly profit, Chief Strategy Officer James Mitchell said it expects growth in mobile-gaming revenue to plateau. HSBC cited the forecast for cutting its rating on the stock to neutral from overweight.

“It’s more profit-taking at the moment,” said Mikey Hsia, a sales trader at Sunrise Brokers LLP. “Tencent has been one of the best performing large cap stocks and yes it performed well again in its earnings but it looks like everyone has it for now and so we need to clear out some of that optimism before it goes again.”

Casino Shares

Gaming companies rose. SJM jumped 3.4 percent to HK$20.10 after second-quarter earnings excluding some items beat estimates. Galaxy Entertainment Group Ltd. (27) added 1.1 percent to HK$60.55. Sands China Ltd. advanced 1.1 percent to HK$53.15.

China Mobile Ltd. (941) rose 1.1 percent to HK$88.30. The company posted 32.5 billion yuan in second-quarter net income, compared with the 29 billion-yuan average estimate in a Bloomberg survey, citing expansion of its fourth-generation network and as sales of Apple Inc.’s iPhone helped the world’s largest carrier add more subscribers than competitors.

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, Tom Redmond

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