Hong Kong stocks fell, with the benchmark index dropping to its lowest level since November on concern an outbreak of bird flu that has killed six people in China may cause an epidemic.
China Southern Airlines Co., Asia’s biggest carrier by passenger numbers, dropped 8.5 percent as the outbreak of avian flu may limit travel to the region. China Resources Land Ltd., the second-biggest mainland property firm traded in Hong Kong, slumped 4.1 percent as developers declined more than any other index group. Techtronic Industries Co., a maker of power tools that counts North America as its biggest market, fell 3.8 percent as U.S. jobless claims rose the most since November.
The Hang Seng Index slid 2.7 percent to 21,726.90 at the close in Hong Kong. Only one stock rose on the 50-member gauge, which posted a 2.6 percent decline for the week. The Hang Seng China Enterprises Index of mainland shares retreated 3.1 percent to 10,429.31. Hong Kong trading resumed after a public holiday yesterday, while China’s markets are closed today.
“We are pretty much in a panic mode from a possible epidemic from the new bird flu in China.” said Jackson Wong, vice president at Hong Kong-based brokerage Tanrich Securities Co., noting the selloff in Hong Kong was probably worsened because Chinese markets are closed for a holiday. “Investors cannot sell A-shares today so the only thing they can do is sell their H-share counterparts.”
The Hang Seng Index has slipped 8.8 percent since Jan. 30 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.
Volume on the benchmark Hang Seng Index was about 34 percent greater than the 30-day average. The gauge traded at 10.4 times estimated earnings, down from a multiple of 11.6 on Jan. 30. That compares with 14.1 times for the Standard & Poor’s 500 Index and 12.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Six people have died from a new strain of bird flu that emerged in eastern China, and authorities detected the virus in pigeon samples collected at a marketplace. Shanghai, China’s financial hub, has reported six of the 14 human cases of the H7N9 strain of avian influenza confirmed by local authorities since the country’s health ministry disclosed the first cases last month, China’s official Xinhua News Agency reported yesterday.
China Southern closed 8.5 percent lower at HK$3.87 after earlier plunging as much as 15 percent. Air China Ltd., Asia’s biggest carrier by market value, fell 9.8 percent to HK$6.05. Cathay Pacific Airways Ltd., the Hong Kong-based airline dropped 4.1 percent to HK$12.28.
“If the bird flu continues to grow, no one will want to take Chinese airlines,” Wong said of the moves. “That’s added to the selling pressure.”
Developers led slumps by the four industry groups on the benchmark index on the avian flu threat. The decline steepened after billionaire investor George Soros said China has a property bubble, in an interview with CNBC in Hong Kong today.
China Resources Land slid 4.1 percent to HK$21.00. Country Garden Holdings Co., a Foshan-based developer fell 5.7 percent to HK$3.79. Hang Lung Properties Ltd., the Hong Kong-based company investing more than $8.5 billion building malls in mainland China, fell 3.8 percent to HK$29.00.
Futures on the S&P 500 Index declined 0.2 percent. The gauge added 0.4 percent yesterday as central banks in Japan and Europe reassured investors that they will keep economies awash in cash to bolster growth.
U.S. jobless claims rose by 28,000 to 385,000 in the week ended March 30, the highest since Nov. 24, Labor Department figures showed yesterday. The median forecast of 47 economists surveyed by Bloomberg called for a drop to 353,000. A U.S. government report today is forecast to show a gain of 190,000 in U.S. payrolls last month, following a 236,000 advance in February, according to economists surveyed by Bloomberg.
Techtronic slid 3.8 percent to HK$18.04. Li & Fung Ltd., a supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp., fell 4 percent to HK$10.14. Yuen Industrial Holdings Ltd., which makes shoes for Nike Inc., slid 1.2 percent to HK$24.65.
Hang Seng Index futures slid 2.9 percent to 21,709. The HSI Volatility Index rose 17 percent to 16.96, indicating traders expect a swing of 4.8 percent for the equity benchmark in the next 30 days.