Hong Kong stocks fell, with the city’s benchmark index dropping to a three-week low, on concerns China may slow the pace of monetary policy easing and corporate earnings are deteriorating.
Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, dropped 1.4 percent a day before reporting earnings. Evergrande Real Estate Group Ltd., China’s biggest developer by sales volume, slid 3.1 percent after reporting a 21 percent drop in its first-half underlying profit. China Life Insurance Co., the nation’s largest insurer, advanced 2 percent even after posting a 26 percent profit drop.
The Hang Seng Index fell 0.1 percent to 19,788.51 at the 4 p.m. close in Hong Kong, the lowest close since Aug. 3. About three stocks fell for every two that rose on the gauge. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong lost 0.5 percent to 9,470.46. Losses were limited before data today forecast to show the U.S. economy grew at a faster pace.
“The Chinese government will actually release some other policies in relation to the property market and they will introduce a lot of stimulus policies to help Chinese exporters, but they will take time,” said Lewis Wan, Hong Kong-based chief investment officer at Pride Investments Group Ltd., which manages $300 million of assets. “If the economy keeps improving, QE3 won’t be needed urgently,” he said, referring to a third-round of asset purchases known as quantitative easing in the U.S.
The Hang Seng Index is little changed this month as investors awaited indications on whether policy makers will act to counter a slowdown in the global economy. It rose the past two months. The gauge traded for 10.5 times estimated earnings, compared with 9.3 for China’s Shanghai Composite Index and 13.7 for the Standard & Poor’s 500 Index.