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Hong Kong Stocks Decline Second Day as Developers Slide

Jan. 16 (Bloomberg) -- Hong Kong stocks fell, with the city’s benchmark index falling for a second day, as developers dropped after China’s Premier Wen Jiabao said the country should establish a property tax.

China Overseas Land & Investment Ltd., a state-controlled developer, sank 0.8 percent. Bank of China Ltd. led a decline by the nation’s banks. Tencent Holdings Ltd. rose to its highest in two months as Goldman Sachs Group Inc. reiterated a buy rating on the Internet company. Golden Wheel Tiandi Holdings Co. jumped 21 percent on its trading debut.

The Hang Seng Index lost 0.1 percent to 23,356.99 at the close of trading in Hong Kong. The Hang Seng China Enterprises Index of mainland companies dropped 0.8 percent to 11,907.52 as a report showed China’s foreign direct investment declined for the first full year since 2009 as manufacturers relocated in search of cheaper labor.

“The Chinese are getting very sensitive to big rises in property prices because it’s not a healthy development,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages about $126 billion. “The property curbs will be an ongoing development.”

Futures on the Standard & Poor’s 500 Index lost 0.2 percent today. The gauge yesterday added 0.1 percent as a rally in retail and transportation shares overshadowed concern about discussions on raising the U.S. government’s debt ceiling.

Share Valuations

Hong Kong’s benchmark index surged 23 percent last year as China’s economy showed signs of improvement and as central banks around the globe added stimulus. Shares on the measure traded at 11.3 times estimated earnings yesterday, compared with 13.3 for the S&P 500 and 12 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Chinese property developers and banks led a decline in Hong Kong today, after Premier Wen said the country should “gradually” establish a property taxation system that covers trading and ownership, according to a statement published on the central government’s website.

China Overseas Land & Investment, the nation’s biggest real estate company traded in Hong Kong, slipped 0.8 percent to HK$24.80. China Resources Land Ltd., which gets all its revenue from the mainland, slid 0.9 percent to HK$22.95.

Bank of China fell 1.1 percent to HK$3.67, leading the decline among Chinese banks. Industrial and Commercial Bank of China Ltd. lost 0.7 percent to HK$5.82 while Agricultural Bank of China Ltd., the nation’s third-biggest lender by market value, sank 2 percent to HK$3.95.

Tencent Advances

Among other stocks that rose, Tencent gained 3.5 percent to HK$267.20, the biggest support to the Hang Seng Index. The stock was reitarated as buy by Goldman Sachs as revenue from advertising may have risen last year.

Golden Wheel surged 21 percent to HK$2.04 in its trading debut today. The shopping-mall operator had priced its initial public offering shares at HK$1.68 each.

The Hang Seng Volatility Index rose 3.2 percent to 15, indicating options traders expect a swing of 4.3 percent in the next 30 days. Futures on the Hang Seng Index fell 0.4 percent to 23,281. Volume on the measure was 10 percent below its 30-day average today.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

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

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