Hong Kong stocks fell, retreating from a 16-month high, after a report signaled China’s new leaders may accept slower economic growth in favor of a more sustainable model.
Sino Land Co., a Hong Kong builder controlled by billionaire Robert Ng, fell 1 percent after a report city officials may take more steps to stabilize the property market. Foxconn International Holdings Ltd., a handset supplier controlled by Hon Hai Precision Industry Co. which assembles Apple Inc.’s iPhone, fell 2.9 percent after Apple was downgraded at Citigroup Inc. China Eastern Airlines Corp. jumped 6.3 percent, leading carriers higher after Jefferies Group Inc. said Chinese airlines are set for cyclical recovery.
The Hang Seng Index fell 0.4 percent to 22,513.61 at the close, dropping by the most in two weeks. More than twice as many stocks declined as rose in the measure, with volume 2.2 percent above the 30-day average for the time of day, according to data compiled by Bloomberg. All four industry groups on the benchmark index fell, led by property companies. The Hang Seng China Enterprises Index of mainland companies slid 0.1 percent to 11,294.11.
“I think the rally ran out of steam,” Francis Lun, Hong-Kong based managing director at Lyncean Securities Ltd, said by telephone today. “Last week was a very good week, but there’s just not enough driving force behind it.”
The Hang Seng Index rallied 23 percent this year through Dec. 14 on signs of recovery in the U.S. and China, the world’s two largest economies, and as central banks took steps to stimulate global growth. The measure traded at 11.8 times estimated earnings compared with a multiple of 13.6 for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.
China said it will seek a higher “quality and efficiency” of growth next year, signaling new leaders may accept a reduced pace of expansion. There was no mention of seeking “relatively fast” growth, a policy in place since 2006, in a report yesterday by the state-run Xinhua News Agency after an annual conference in Beijing.
Mainland leaders removed a $1 billion ceiling on investments by overseas sovereign wealth funds and central banks in its capital markets, according to revised regulations posted Dec. 14 on the State Administration of Foreign Exchange’s website. The regulator kept the total limit for qualified foreign institutional investors at $80 billion. Approved quotas for QFII funds total $36.04 billion, or less than 2 percent of stock-market value.
The Shanghai Composite Index added 0.5 percent to 2,160.342. The gauge jumped 4.3 percent on Dec. 14, the most since October 2009, amid speculation state-backed institutions were buying shares as a manufacturing survey added to optimism the world’s second-largest economy will rebound.
Sino Land slid 1 percent to HK$14, while Cheung Kong (Holdings) Ltd., the developer controlled by Li Ka-shing, declined 1.1 percent to HK$119.30. The city’s Chief Executive Leung Chun-ying said the government attaches importance to dealing with high property prices and shortage of land, and will take more steps to stabilize the market, Radio Television Hong Kong reported.
Foxconn International slid 2.9 percent to HK$3.72, while AAC Technologies Holdings Inc., which supplies speakers to Apple, sank 5.7 percent to HK$25.85. Apple was cut to neutral from buy at Citigroup on concerns about demand for the iPhone 5.
“We are turning cautious on Apple supply chain, as we believe we are at the peak of many product cycles,” Jeff Pu, a Taipei-based analyst at Fubon Financial Holding Co., wrote in a report today. “The most important message is ‘iPhone 5 is game over,’ as demand appears to be weaker than expected -- i.e., U.S. peaking, China launch just so-so.”
Futures on the S&P 500 advanced 0.4 percent today. The gauge slid 0.4 percent Dec. 14. Household purchases increased 0.4 percent last month after declining 0.2 percent in October, according to the median estimate of 66 economists surveyed by Bloomberg before Dec. 21 figures from the Commerce Department. Other reports may show home sales and demand for long-lasting goods climbed.
Among stocks that rose, China Eastern Airlines jumped 6.3 percent to HK$3.20, while China Southern Airlines Co., Asia’s biggest carrier by passenger numbers, increased 3.2 percent to HK$3.92. Air China Ltd., the nation’s biggest carrier by market value, climbed 2.6 percent to HK$6.28.
China’s domestic passenger demand will further recover in the first quarter, Jefferies said in a report dated Dec. 14, naming China Eastern Airlines as its top pick.
Futures on the Hang Seng Index slid 0.7 percent to 22,474. The HSI Volatility Index gained 4.6 percent to 15.65, indicating traders expect a swing of 4.5 percent on the equity benchmark in the next 30 days.