Hong Kong stocks declined, with the Hang Seng Index retreating from a three-month high, on concern China’s deepening economic slowdown will damp corporate profits.
China Life Insurance Co., the nation’s biggest insurer by market value, fell 3.4 percent after posting lower premium income. Industrial & Commercial Bank of China Ltd. slid 1.1 percent, leading Chinese lenders lower, after a report showed the industry’s non-performing loans increased for a third straight quarter. Great Wall Motor Co. sank 5.1 percent after Australia’s consumer protection agency found asbestos inside vehicles made by the Chinese automaker.
The Hang Seng Index slipped 1.2 percent to 20,052.29 at the close, with seven shares falling for each that rose. The gauge climbed 2.4 percent last week on speculation China will add to economic stimulus after export growth collapsed, industrial production unexpectedly slowed and inflation decelerated. The Hang Seng China Enterprises Index of mainland companies fell 1.4 percent to 9,779.06.
“The earnings momentum and the growth outlook is just too weak for equities to keep going higher,” Simon Grose-Hodge, head of investment strategy for Asia at LGT Group, said on Bloomberg Television. “Investors want to see more stimulus from China.”
Futures on the Standard & Poor’s 500 Index lost 0.3 percent today. The gauge was little changed yesterday as a slump in technology and financial shares reversed an earlier rally triggered by better-than-estimated U.S. retail sales for July.
The benchmark Hang Seng Index fell 7.5 percent from this year’s high in February amid signs China’s slowdown is deepening and on concern Europe will struggle to contain its debt crisis. Shares on the gauge were valued at 10.6 times estimated earnings on average, compared with 13.6 for the S&P 500 Index and 11.6 for Stoxx Europe 600 Index.
China Life dropped 3.4 percent to HK$21.15. Premium income fell to 203.3 billion yuan ($32 billion) between January and July this year, compared with 215.3 billion yuan a year earlier, the company said in a statement to the Hong Kong stock exchange yesterday.
NVC Lighting Holdings Ltd. sank 28 percent to a record-low HK$1.01 after the supplier of lighting fixtures said first-half net income will drop significantly due to rising costs and declining consumer demand.
Chinese lenders fell after the China Banking Regulatory Commission said the industry’s bad loans rose by 18.2 billion yuan to 456.4 billion yuan in the three months ended June 30, its third straight quarterly increase, highlighting pressures on asset quality and profit growth as the economy weakens.
ICBC, as the world’s biggest bank by market value is also known, slipped 1.1 percent to HK$4.50. China Construction Bank Corp., the nation’s second-largest lender, lost 0.7 percent to HK$5.38. Agricultural Bank of China Ltd. fell 0.9 percent to HK$3.15.
Futures on the Hang Seng Index declined 0.9 percent to 20,074. The HSI Volatility Index rose 3.3 percent to 18.85, indicating traders expect a swing of about 5.4 percent in the benchmark index during the next 30 days.
Gome Electrical Appliances Holding Ltd., China’s second-largest electronics retailer, slumped 6.9 percent to 67 Hong Kong cents after the company and two of its competitors announced plans to cut prices.
Great Wall Motor, the biggest maker of sports-utility vehicles and pick-up trucks in China, dropped 5.1 percent to HK$16.48. Australia will recall about 21,500 vehicles made by the company after regulators found asbestos in them.
China Coal Energy Co., the nation’s second-largest producer of the fuel, slid 3.7 percent to HK$7.23 after reporting sales volume in July dropped 24 percent from a year earlier to 9.25 million tons.
Among stocks that advanced, Standard Chartered Plc, the London-based bank that generates about 60 percent of profit and revenue from Asia, gained 3.6 percent to HK$171.70. The bank agreed to settle a New York money-laundering probe for $340 million. The lender still faces federal inquiries over claims it helped sanctioned nations including Iran illegally funnel money through the U.S.