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Hong Kong Stocks Retreat on Weaker Earnings; AIA Jumps on Debut

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Oct. 29 (Bloomberg) -- Hong Kong stocks fell, paring the Hang Seng Index’s monthly gain, after Bank of Communications Co. and China Life Insurance Co. reported earnings that missed analysts’ estimates. AIA Group Ltd. rose on its first day of trading.

BoCom, China’s fifth-largest lender, tumbled 7.8 percent. China Life slid 3 percent and was the greatest drag on the Hang Seng Index. Esprit Holdings Ltd., the biggest Hong Kong-listed clothier, declined 2 percent after reporting sales fell 9 percent. AIA, the insurer sold by American International Group Inc. in a $17.8 billion initial public offering, surged 17 percent.

The Hang Seng Index declined 0.5 percent to 23,096.32 at the close. That pared the measure’s gain this month to 3.3 percent. The index has fallen 3.2 percent since Oct. 14, when U.S. reports showed jobless claims unexpectedly rising and the country’s trade deficit widening, increasing speculation the Federal Reserve will act to shore up the world’s largest economy.

“There’s a lot of noise about more quantitative easing in the U.S.,” said Steven Leung, director of institutional sales at UOB-Kay Hian Ltd. in Hong Kong. “So many people are locking in profit. There’ll be a few more banks reporting earnings later today, and we’ll need to see what they have to say about provisions.”

The Hang Seng China Enterprises Index of so-called H shares of Hong Kong-listed Chinese companies dropped 1.2 percent to 13,168.68.

BoCom Plunges

The Hang Seng Index has gained 5.6 percent this year as economic reports and corporate earnings boosted confidence in a global recovery. Stocks in the gauge trade at an average 14.7 times estimated earnings, compared with about 17.2 times at the start of the year.

Bank of Communications plunged 7.8 percent to HK$8.47, the biggest drop on the Hang Seng Index. The lender said net income climbed to 9.18 billion yuan ($1.37 billion) from a restated 7.39 billion yuan. That fell short of the 9.5 billion yuan median estimate of seven analysts surveyed by Bloomberg.

An index of financial shares had the steepest drop and was the biggest drag on the Hang Seng Index among its four industry groups.

Yue Yuen Industrial Holdings Ltd., which gets 31 percent of its sales from the U.S., fell 0.2 percent to HK$27.80. Techtronic Industries Co., a maker of Ryobi power tools and Hoover vacuum cleaners, dropped 3.1 percent to HK$7.85.

China Life Slides

Fed policy makers will meet next week to decide whether the U.S. economy requires more stimulus.

China Life Insurance Co., the nation’s biggest insurer, said third-quarter profit rose 3.4 percent to 6.91 billion yuan from a restated 6.68 billion yuan, a year earlier. The stock declined 3 percent to HK$33.95.

“The results came in slightly below expectations,” Guosen Securities Co. analysts Shao Ziqin and Tong Chengdun said in an e-mailed note today.

China Life’s smaller rival Ping An Insurance (Group) Co. slid 2.5 percent to HK$83.45 after reporting on Oct. 27 a drop in third-quarter profit.

Esprit declined 2 percent to HK$41.75. Sales in the three months to Sept. 30 fell 9 percent to HK$8.51 billion as revenue from Europe, from where the company derives 81 percent of its revenue, dropped 15 percent.

AIA Group Ltd. rose 17 percent to HK$23.05. AIG Chief Executive Officer Robert Benmosche sold a 58 percent stake in a unit that spans 15 Asian markets and was described by one of his predecessors as a “crown jewel” to help repay a $182.3 billion U.S. government bailout.

Twice as many stocks fell as advanced on the 45-member Hang Seng Index. Futures on the index slipped 0.6 percent to 22,973.

To contact the reporter on this story: Nick Gentle in Hong Kong at ngentle2@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net.

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