Hong Kong stocks declined, led by raw material producers, as metal prices dropped and trading volumes sank ahead of a public holiday tomorrow.
Jiangxi Copper Co., China’s biggest producer of the metal, slipped 1.1 percent after copper futures fell to a seven-month low. Lonking Holdings Ltd., a Shanghai-based maker of steamrollers, fell 3.2 percent, extending losses for a second day, as brokerages including Haitong Securities Co. recommended selling the shares. Guangzhou R&F Properties Co. climbed 3.2 percent after the Chinese developer reported increased home sales in March.
The Hang Seng Index slid 0.1 percent to close at 22,337.49 after rising as much as 0.7 percent. The Hang Seng Index fell 6.2 percent from Jan. 30 through yesterday as China and Hong Kong stepped up measures to curb property prices and Cyprus’s banking woes spurred concern that Europe’s debt crisis is far from resolved. Shares on the gauge traded at 10.7 times estimated earnings down from 11.6 on Jan. 30.
“While valuations are looking attractive, equity risk premium remain high,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Ltd., which oversees about $51 billion. “Growth in China isn’t going to surprise on the upside as the new leadership is very focused on managing inflation.”
The Hang Seng China Enterprises Index of mainland shares fell 0.5 percent to 10,758.80. The measure earlier jumped 0.5 percent after a report showed China’s service industries expanded at a faster pace last month.
Volume on the benchmark Hang Seng Index was about 29 percent below the 30-day average. The gauge’s valuation compares with 14.2 times for the Standard & Poor’s 500 Index and 12.7 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Futures on the S&P 500 added 0.1 percent. The measure climbed 0.5 percent yesterday after the Commerce Department report showed a 3 percent gain in factory orders and Italian and Spanish bond yields declined.
Raw-material producers posted the biggest decline among the 11 industry groups in the broader Hang Seng Composite Index. The three-month copper futures fell as much as 0.8 percent in London today, heading for the lowest since August. Gold and silver also dropped.
Jiangxi Copper slipped 1.1 percent to HK$16.62. Zijin Mining Group Co., China’s biggest gold producer, decreased 2 percent to HK$2.51.
Glencore International Plc, the largest publicly traded commodities supplier, fell 2.5 percent to HK$41.25 after the completion of the company’s $33 billion takeover of Xstrata Plc was extended for a fifth time as regulator approvals in China got delayed.
Lonking Holdings dropped 3.2 percent to HK$1.52. Haitong Securities lowered its rating to sell from hold, while HSBC Holdings Plc reduced its recommendation to underweight from neutral. The stock tumbled 14 percent the past two days after reporting full-year profit that missed analysts’ estimates.
Among shares that rose, Guangzhou R&F Properties gained 3.2 percent to HK$13.70 after saying home sales in March increased 14 percent from a year earlier to 3.34 billion yuan ($539 million).
Hang Seng Index futures slid 0.2 percent to 22,346. The HSI Volatility Index dropped 3.5 percent to 14.51, indicating traders expect a swing of 4.2 percent for the equity benchmark in the next 30 days.