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Most Hong Kong Stocks Retreat; Li & Fung Gains on Fed

March 7 (Bloomberg) -- Most Hong Kong stocks fell, with the Hang Seng Index closing little changed, as declines by Chinese consumer-goods companies tempered an advance by Li & Fung Ltd. after reports showed improvement in the U.S. economy.

Belle International Holdings Ltd., the mainland’s largest footwear retailer, dropped 3 percent and snack-maker Want Want China Holdings Ltd. slid 1 percent. Li & Fung, a supplier to Wal-Mart Stores Inc., rose 3.6 percent after the U.S. Federal Reserve said the economy expanded at a modest pace. About four stocks declined for every three that gained on the Hang Seng Composite Index, the city’s broadest equity measure.

The Hang Seng Index fell less than 0.1 percent to 22,771.44 at the close. Volume was about 26 percent below the 30-day intraday average as investors watch an annual meeting in China where government policy is set. The Hang Seng China Enterprises Index of mainland companies slid 0.4 percent to 11,311.45.

“We are taking small breaks to digest what’s going on at the policy front,” said Liu Yang, Hong Kong-based chairwoman of Atlantis Investment Management Ltd., which oversees $3.6 billion. “Between now and June, the market will be range-trading, but after summer vacation investors will return to the main market and I think there will be another rally.”

Hong Kong’s benchmark index has fallen 4.4 percent since reaching a 20-month high at the end of January. The gauge traded at 11.1 times average estimated earnings, compared with 13.9 for the Standard & Poor’s 500 Index and 12.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Retailers Slide

Want Want China slid 1 percent to HK$11.38. The rice cake maker’s rating was cut to neutral at KGI Asia Ltd. and hold at Religare Capital Markets after shares yesterday closed at a record high to cap nine days of gains. Belle fell 3 percent to HK$14.94.

MGM China Holdings Ltd., the Macau casino venture between a daughter of gambling mogul Stanley Ho and MGM Resorts International, retreated 3.4 percent to HK$17.06. A term sheet obtained by Bloomberg News showed an unidentified shareholder is offering 25 million shares at HK$16.99 to HK$17.20 each.

SJM Holdings Ltd., a casino operator founded by Ho, declined 3.6 percent to HK$18.22. Galaxy Entertainment Group Ltd., whose share price is up almost 30 times since the end of 2008, retreated 3 percent to HK$30.50.

Futures on the S&P 500 rose 0.1 percent today. The U.S. equity gauge gained 0.1 percent yesterday and the Dow Jones Industrial Average extended its record high after ADP Research said companies added 198,000 workers last month, exceeding the 170,000 estimated by economists.

Stocks linked to the U.S. rose. Li & Fung rose 3.6 percent to HK$10.82. Yue Yuen Industrial (Holdings) Ltd., a supplier to Nike Inc., gained 1.6 percent to HK$25.95.

Policy Meeting

As the National People’s Congress opened this week, the Chinese government kept its annual economic growth target at 7.5 percent, while projecting a 10 percent jump in spending on areas such as health care, agriculture and education.

China Cosco Holdings Co., the nation’s biggest shipping company, advanced 2.1 percent to HK$4.37, extending this week’s gain to 6.3 percent. Supports for the industry may be introduced, China Securities Journal reported yesterday, citing the nation’s transportation minister.

China’s export growth probably slowed to 8.1 percent in February from 25 percent the previous month, economists said before a report tomorrow. Imports dropped 8.5 percent, they predicted.

Hang Seng Index futures gained 0.2 percent to 22,686. The HSI Volatility Index slid 1.4 percent to 15.28, indicating traders expect a swing of 4.4 percent for the equity benchmark in the next 30 days.

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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