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Hong Kong Stocks Snap Win Streak as Citic Pacific Slides

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Nov. 20 (Bloomberg) -- Hong Kong stocks slid, with the Hang Seng Index dropping for the first time in three days, as Citic Pacific Ltd. declined after filing an injunction in Australian court to stop its mining right from being terminated.

Citic Pacific fell 4.3 percent. Tingyi (Cayman Islands) Holding Corp., a maker of instant noodles and beverages, slumped 3.7 percent after JPMorgan Chase & Co. cut its rating on the stock on slowing sales growth. Longfor Properties Co. dropped 4.2 percent after its chairwoman split her stake in the company because of a divorce. Techtronic Industries Co., a maker of power tools that counts North America as its biggest market, rose 3.5 percent as U.S. housing data beat estimates.

The Hang Seng Index slid 0.2 percent to 21,228.28 at the close, reversing earlier gains of as much as 1 percent. More than twice as many shares fell as advanced in the 49-member gauge. Trading volume on the gauge was 24 percent below its 30-day average. The Hang Seng China Enterprises Index of mainland companies declined 0.6 percent to 10,227.24.

“Hong Kong has rebounded in recent days but there are still uncertainties including global economic growth and Europe’s debt problem, so there is some profit taking,” said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong. “Overall it’s in an upward trend.”

The Hang Seng Index advanced 17 percent through yesterday from this year’s low on June 4 as economic data showed China’s slowdown may be bottoming and central banks around the globe added stimulus to spur growth.

Relative Value

Of the 55 companies on the Hang Seng Composite Index that reported quarterly earnings since Oct. 1 and for which estimates are available, 58 percent missed expectations, according to data compiled by Bloomberg.

The Hang Seng Index traded at 11.1 times estimated earnings, compared with 13.3 times for the Standard & Poor’s 500 Index and 12 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Citic Pacific slid 4.3 percent to HK$9.50. The company said it filed an injunction against Mineralogy Pty to stop it from terminating site lease agreements and mining right it acquired from the company and after the company claimed certain agreements have been breached. Citic Pacific had the steepest drop in the Hang Seng Index, followed by Tingyi.

Tingyi declined 3.7 percent to HK$22.10. JPMorgan cut its rating on the stock to underweight from neutral, and reduced its price target to HK$16 from HK$18, saying slowing sales growth in beverages is disappointing and the stock looks overvalued.

Longfor Properties Drop

Longfor Properties retreated 4.2 percent to HK$13.70. Chairwoman Wu Yajun’s stake in Longfor, which Wu co-founded with ex-husband Cai Kui, dropped from a combined 72 percent to 43 percent, while Cai retains 29 percent, according to filings from Hong Kong’s stock exchange.

Futures on the S&P 500 Index slid 0.2 percent today. The gauge jumped the most in two months yesterday as President Barack Obama expressed confidence on a budget agreement with Congress and sales of previously owned U.S. homes climbed in October.

Existing U.S. home sales increased 2.1 percent to a 4.79 million annual rate in October, figures from the National Association of Realtors showed yesterday, exceeding the median forecast of economists surveyed by Bloomberg News.

Techtronic gained 3.5 percent to HK$15.50. Man Wah Holdings Ltd., a sofa maker that gets half its sales in the U.S., rose 4.2 percent to HK$5.50. The stock was rated outperform in new coverage at CIMB Securities HK Ltd.

The HSI Volatility Index slid 0.2 percent to 16.35, indicating traders expect a 4.7 percent swing in the equity benchmark in the next 30 days. Futures on the Hang Seng Index rose 0.1 percent to 21,269.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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