Hong Kong stocks fell, with the benchmark equity index retreating from a three-month high, as Industrial & Commercial Bank of China Ltd. dropped after Goldman Sachs Group Inc. was said to sell its stake in the lender.
ICBC fell 2.1 percent. PICC Property & Casualty Co. declined 2.6 percent after the insurer said it would sell shares. Cosco Pacific Ltd., the container-terminal arm of China’s largest shipping group, gained 4.1 percent after agreeing to sell a $1.2 billion asset. GCL-Poly Energy Holdings Ltd., the world’s No. 1 maker of polysilicon used in solar panels, rose 9 percent on a report the U.S. is in talks with the European Union and China to settle a dispute over the trade of solar-energy equipment.
The Hang Seng Index slipped 0.5 percent to 23,366.37 at the close in Hong Kong, retreating from its highest close since Feb. 4. Trading volumes on the equity benchmark were more than double the 30-day intraday average, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index of mainland companies dropped 0.9 percent to 11,083.23.
“We could see a 5 to 8 percent correction as markets have become somewhat extended,” Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which oversees $126 billion, said on Bloomberg Television. “There’s still a lot of uncertainty hanging around China.”
The 2013 gross domestic product growth forecast for China was reduced to 7.7 percent from 8 percent at UBS AG, which said structural reforms will take time to implement and have an effect on the economy.
The Hang Seng Index, this year’s third-worst performing developed market, has climbed 3.1 percent this year, compared with the Standard & Poor’s 500 Index’s 17 percent gain. Hong Kong’s benchmark index traded at 11.1 times estimated earnings, below its five-year average of 12.6, according to data compiled by Bloomberg.
Futures on the S&P 500 rose 0.1 percent today. The U.S. equity gauge yesterday retreated 0.1 percent from a record high as investors weighed the pace of central bank stimulus. Shares erased gains after Fed Bank of Chicago President Charles Evans said the economy has improved “quite a lot.”
Some officials in recent months have signaled they favor tapering quantitative easing in the next few months. San Francisco Fed President John Williams said last week that the central bank may want to reduce the pace of its asset purchases as early as this summer “if all goes as hoped.”
“Talk of the Fed starting to wind back quantitative easing could cause a bit of a correction,” AMP’s Oliver said. “The global economy is still improving and there’s still a lot of liquidity sitting on the sidelines. Therefore the buy on dips mentally would kick in fairly quickly and any correction will be fairly limited in scope.”
ICBC slid 2.1 percent to HK$5.52, the biggest drag on the Hang Seng Index. Goldman Sachs raised $1.1 billion selling its stake in the lender at HK$5.50 per share, a person familiar with the matter said. That’s a 2.5 percent discount over ICBC’s closing price yesterday in Hong Kong trading.
PICC Property & Casualty declined 2.6 percent to HK$9.94. The company said it plans to raise 5.8 billion yuan ($944 million) in a rights offer in Hong Kong and China to help meet capital requirements.
China’s proposed ban on lower-quality coal imports is likely to boost domestic benchmark prices by as much as 8 percent as supplies drop, according to Fenwei Energy Consulting Corp. Huaneng Power International Co. could be hardest hit because 29 percent of its coal is imported, Credit Suisse Group AG said in a note dated yesterday.
Huaneng Power, the publicly traded unit of China’s largest electricity producer, sank 6.1 percent to HK$8.66, dropping a second day after the stock last week reached its highest level in more than five years.
China Resources Power Holdings Co., a mainland generator owned by state-controlled China Resources (Holdings) Co., dropped 4.3 percent to HK$21.10. The stock had the steepest drop on the Hang Seng Index. Huadian Power International Corp. tumbled 10 percent to HK$4.13.
GCL-Poly jumped 9 percent to HK$1.93. The Obama administration is in trade talks with the EU and China to settle a dispute over solar-energy equipment, people familiar with the discussions said. Solargiga Energy Holdings Ltd., a maker of silicon wafers, advanced 2.4 percent to 42 Hong Kong cents.
Cosco Pacific gained 4.1 percent to HK$11.24, capping its biggest two-day advance since November. The company agreed to sell its stake in Cosco Container Industries Ltd., which owns 21.8 percent of China International Marine Containers Group Co., for $1.22 billion.
Futures on the Hang Seng Index lost 0.4 percent to 23,288. The HSI Volatility Index fell 1 percent to 16.68, indicating traders expect a swing of 4.8 percent for the equity benchmark in the next 30 days.