July 23 (Bloomberg) -- Hong Kong stocks fell, with the Hang Seng Index falling most in two months, after a Chinese central bank adviser predicted the nation’s economic growth could slow further and as the prospect of Greece leaving the euro zone resurfaced.
China Merchants Holdings International Co., a port operator that moves about a third of the mainland’s shipping containers, fell 5.9 percent after saying profit declined. HSBC Holdings Plc, Europe’s largest bank, slid 5.7 percent as Greece’s main creditors assess its progress on meeting bailout goals and Spain prepares to sell bonds. Citic Securities Co., China’s largest brokerage by market value, lost 7.3 percent. A measure of options prices for the Hang Seng jumped the most in two months.
The Hang Seng fell 3 percent to 19,053.47 at the close of trading in Hong Kong, all but erasing last week’s gains. All shares but one on the 49-member gauge retreated. Volume was about 16 percent below a 30-day average. The Hang Seng China Enterprises Index of mainland companies dropped 3.1 percent to 9,271.60.
“Until we see a more positive outlook in Europe, China is going to be under pressure,” said Andrew Sullivan, principal trader at Piper Jaffray Asia Securities Ltd. “Now that Spain is looming on the horizon, the prospect of a breakdown of the euro is looking more likely than before.”
The benchmark Hang Seng fell 12 percent from this year’s high in February through today on signs Europe’s debt crisis is worsening while growth slows in China and the U.S. The drop reduced the value of shares on the gauge to 10 times estimated earnings on average, compared with 13.2 for the Standard & Poor’s 500 Index and 10.7 for Stoxx Europe 600 Index.
The HSI Volatility Index, a measure of options prices for the index, jumped 18 percent to 22.19, the biggest rise since May 7, indicating traders expect a swing of about 6.4 percent in the benchmark index during the next 30 days. Every industry group on the broader Hang Seng Composite Index fell more than 1.4 percent today.
Song Guoqing, a member of the People’s Bank of China monetary policy committee, said at a forum in Beijing that the nation’s expansion may cool to 7.4 percent this quarter, fueling concerns that the world’s second-biggest economy has yet to bottom out.
China Merchants Holdings fell 5.9 percent to HK$23.80, its biggest drop since May 7 after saying that it expected a “significant” profit decline for the first half of the year. Weichai Power, a Chinese maker of diesel engines that which issued a profit warning citing the slowdown deepening losses, saw its share price slip 4.8 percent to HK$22.75, its lowest close since October 2009.
Shares of companies that do business in Europe dropped as Greek’s creditors in the monetary union are increasingly reluctant to provide further funds for the troubled economy and comments by German Vice Chancellor Philipp Roesler that the country’s possible exit from the euro “has long ago lost its terror.”
Spain is preparing to sell bonds tomorrow, the same day Greece is holding talks with its creditors over concerns the country could fail to meet its financial commitments.
Esprit Holdings Ltd., a retailer which relies on Europe for most of its sales, lost 1.9 percent to HK$8.98, its lowest close since November. HSBC Holdings slid 5.7 percent to HK$63.10, heading for its biggest fall in eight months.
Citic Securities retreated 7.3 percent to HK$13.48 after agreeing to buy Credit Agricole SA’s CLSA unit for $1.25 billion, joining banks across Asia acquiring the assets of troubled European financial firms.
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