Hong Kong stocks dropped, with the benchmark index headed for a fifth weekly decline, before reports on China’s inflation and manufacturing amid concern the world’s second-largest economy is slowing. Shares slid even after the nation’s first interest rate cut since 2008.
Anhui Conch Cement Co. fell 3.8 percent after saying first-half profit may drop “considerably.” China Resources Enterprise Ltd., a food distributor that gets most of its sales in the mainland, retreated 1.5 percent. Real estate developer Wharf Holdings Ltd. and Wheelock & Co. were suspended pending a transaction announcement. Chinese developers advanced amid speculation the rate increase will boost home sales.
The Hang Seng Index slid 0.9 percent to 18,511.38 as of 10:030 a.m. local time, with twice as many stocks declining as rising in the 49-member gauge. For the week, the index is headed for a 0.3 percent drop, pushing the weekly losing streak to its longest since June 2011. The Hang Seng China Enterprises Index of mainland stocks dropped 1.1 percent to 9,365.39.
“The glass is always either half empty or half full, and right now people are choosing to focus on the empty part,” said Pauline Dan, a Hong Kong- based chief investment officer at Samsung Asset Management Co., which manages $100 billion. “The fact that China’s coming out with a rate cut now leads people to think that upcoming data on the economy is going to be weak.”
Hong Kong’s benchmark index tumbled 14 percent through yesterday from this year’s high on Feb. 29 amid deepening Europe’s debt crisis and signs of economic slowdown in the U.S. and China. Shares on the Hang Seng Index traded at 9.7 times estimated earnings on average yesterday, compared with 12.6 times for the Standard & Poor’s 500 Index and 10.1 times for the Stoxx Europe 600 Index.
Fixed-asset investment probably expanded at the slowest pace in a decade in May, inflation matched a two-year low and industrial output grew less than 10 percent for a second month, reports due tomorrow are expected to show, according to economist surveys by Bloomberg News.
China yesterday cut borrowing costs for the first time since 2008 and loosened controls on bank lending and deposit rates, stepping up efforts to combat a deepening slowdown as Europe’s debt crisis threatens global growth.
Hang Seng Index futures expiring this month slid 0.6 percent to 18,408. The HSI Volatility Index gained 2.8 percent to 27.72, indicating traders expect a swing of about 7.9 percent in the benchmark index during the next 30 days.