Hong Kong stocks fell for a third day, as Chinese developers dropped after the government raised banks’ reserve requirements to tame inflation.
China Resources Land Ltd., a state-controlled developer, fell 3 percent and China Overseas Land & Investment Ltd., controlled by the construction ministry, lost 2.1 percent. Ajisen (China) Holdings Ltd., an operator of Japanese-style casual restaurants, tumbled 11 percent after its chairman sold shares in the company. AIA Group Ltd., the third-largest Asian-based insurer by market value, gained 2.6 percent after its new-business value gained.
The Hang Seng Index fell 0.7 percent to 23,830.31 at the close, after rising as much as 0.6 percent. About four stocks dropped for every one that gained on the 45-member Hang Seng Index. The Hang Seng China Enterprises Index of Chinese companies’ H-shares declined 0.9 percent to 13,410.90.
“Concern is still lingering on further tightening in China,” said Ben Kwong, chief operating officer at KGI Asia Ltd. “Investors are worried there will be further measures to regulate the overheating of the property market.”
China Resources Land dropped 3 percent to HK$14.16, and China Overseas Land fell 2.1 percent to HK$16.14. Shimao Property Holdings Ltd., which gets all its revenue from China, declined 1.6 percent to HK$11.40. A measure of property stocks had the biggest drop among the Hang Seng Index’s four industry groups.
China increased banks’ reserve requirements to lock up cash and cool inflation, and central bank Governor Zhou Xiaochuan said monetary tightening will continue for “some time.”
Reserve ratios will rise a half percentage point from April 21, the People’s Bank of China said on its website yesterday, pushing the requirement to a record 20.5 percent for the biggest lenders. The move came less than two weeks after an interest-rate increase. Zhou said April 16 he sees no “absolute” limit on how high reserve requirements can go.
Ajisen tumbled 11 percent to HK$15.16 after its chairman and Chief Executive Officer Poon Wai placed 63.6 million shares held through wholly owned Favor Choice Group Ltd.
The Hang Seng Index fell 1.6 percent last week as China’s strong economic data fueled concerns the government may take more steps to tame inflation. Shares in the gauge traded at an average 12.7 times forecast earnings on April 15, compared with 14.4 times at the end of last year, according to data compiled by Bloomberg.
AIA New Policies
Among stocks that rose, AIA surged to a record, gaining 2.6 percent to HK$25.70, the biggest positive contributor to the Hang Seng Composite Index. The company said its value of new business rose 21 percent in the first quarter as it sold more-profitable policies.
Siberian Mining Group Co., a coal producer, surged 7.5 percent to 17.3 Hong Kong cents after saying it plans to buy a 70 percent stake in Trenaco SA for $15 million.
Futures on the Hang Seng Index dropped 0.8 percent to 23,779. The HSI Volatility Index, the benchmark gauge for Hong Kong stock options, rose 0.6 percent to 18.11, indicating options traders expect a swing of 5.2 percent in the Hang Seng Index in the next 30 days.