Hong Kong Stocks Fall as Spanish Yields Surge

Hong Kong stocks fell, with the benchmark index snapping a two-day gain, as a surge in Spanish borrowing costs to a record quashed optimism following yesterday’s election of pro-bailout parties in Greece.

HSBC Holdings Plc, Europe’s largest bank, slid 0.8 percent. Tsingtao Brewery Co. fell 7.8 percent after a report billionaire Chen Fa Shu plans agreed to sell 32 million shares in the beermaker at a discount. Sands China Ltd. rose 2.2 percent on a CLSA report that Macau gaming revenue rose this month.

“After Greece, Spain is another problem we have to tackle,” said Francis Lun, managing director at Lyncean Holdings Ltd. “ China’s economy is performing better than the government’s expectation. We will expect optimism towards the markets soon.”

The Hang Seng Index fell less than 0.1 percent to 19,416.67 at the close after rising 3.3 percent in the previous two sessions. More than three stocks fell for each that rose on the 49-company gauge. The Hang Seng China Enterprises Index of mainland stocks fell 0.2 percent to 9,800.23.

Hong Kong’s benchmark index has fallen about 11 percent from this year’s peak in February amid concern economic growth is slowing in the U.S. and China, while Europe’s crisis spreads. Companies on the Hang Seng Index traded at 10 times estimated earnings on average yesterday, compared with 12.9 for the Standard & Poor’s 500 Index and 10.2 for the Stoxx Europe 600 Index.

Hang Seng Index futures expiring this month lost 0.3 percent to 19,402. The HSI Volatility Index fell 6.4 percent to 23.00, indicating traders expect a swing of about 6.6 percent on the gauge during the next 30 days.

G-20 Response

The Group of 20 nations is meeting today in Los Cabos, Mexico. Leaders are focusing their response to Europe’s crisis on stabilizing the region’s banks, adding pressure on German Chancellor Angela Merkel to expand rescue measures as Spanish bond yields surged to the highest since the euro was introduced in 1999. The U.S. Federal Reserve is expected to cut its growth forecasts when it concludes a policy meeting tomorrow.

“The downside you see today is fairly normal profit-taking from the expected good news from Greece,” said Alex Wong, director at Ample Capital Ltd. “People are very cautious in this news-driven market and waiting for a clearer signal to act. The Fed’s meeting this week will be the focus.”

HSBC slid 0.8 percent to HK$66.90. Esprit Holdings Ltd., a clothier that counts Europe as its biggest market, sank 2 percent to HK$10.04. Cosco Pacific Ltd., which operates a port in Greece, rose 0.6 percent to HK$10.2, erasing earlier losses.

Tsingtao Brewery fell 7.8 percent to HK$46.60 after a report that Chen Fa Shu agreed to sell HK$1.5 billion ($193 million) in shares of the Chinese beer maker at a 7 percent discount from yesterday’s close, according to a copy of the term sheet obtained by Bloomberg. The sale was reported earlier by The Wall Street Journal.

Gaming Shares

Casino stocks advanced on a CLSA report that Macau’s monthly gaming revenue rose 19 percent through June 17 from a year earlier, compared with CLSA estimate for a 14 percent full-month gain.

Sands China Ltd. rose 2.2 percent to HK$25.45, while Wynn Macau Ltd. gained 2.1 percent to HK$17.60.

(Corrects index level in fourth paragraph of story that originally ran June 19.)
Before it's here, it's on the Bloomberg Terminal. LEARN MORE