Hong Kong stocks fell for a second day after a storm shut the city’s markets this morning. Power producers declined, while China Galaxy Securities Co. surged in its debut.
Huaneng Power International Co., a unit of China’s largest electricity producer, fell 8.3 percent after its rating was cut by Citigroup Inc. on concern tariffs may fall. Sunny Optical Technology Group Co., a Chinese maker of lenses and prisms, dropped 5.4 percent after its equity rating was reduced to neutral from outperform by Credit Suisse Group AG. China Galaxy, a brokerage controlled by the country’s sovereign wealth fund, jumped 6 percent.
The Hang Seng Index slid 0.5 percent to 23,261.08 at the close, with about three stocks falling for every two that gained on the 50-member gauge. Volume was 7.3 percent below the 30-day average. The Hang Seng China Enterprises Index of mainland companies lost 0.3 percent to 11,053.04. Data tomorrow may show Chinese manufacturing growth isn’t accelerating.
“China’s economic data will remain modest, and the market is now adjusting for that,” said Teresa Chow, a fund manager at RBC Investment (Asia) Ltd., which oversees about $1.1 billion. “The overall Hong Kong market may be slightly better in the very near term, but in the medium term we still need to rely on China macro data.”
The Hang Seng Index, the worst-performing developed-market equity gauge this year, rose less than 3 percent since the end of December amid signs China’s economy is slowing. The Standard & Poor’s 500 Index advanced 17 percent this year, while the Stoxx Europe 600 Index climbed 11 percent.
S&P 500 futures rose 0.2 percent today. The gauge added 0.2 percent yesterday to a record after Federal Reserve Bank of St. Louis President James Bullard said the central bank should continue its bond-buying to boost growth.
“So far we have seen a strong U.S. market but Hong Kong lagged behind,” said Chow. “In terms of valuation, Hong Kong and China are still attractive compared to other markets.”
Hong Kong’s benchmark index traded at 11.1 times estimated earnings yesterday, still below its five-year average of 12.6, according to data compiled by Bloomberg.
The stock exchange canceled morning trading after the Hong Kong Observatory issued its highest-level rainstorm warning. As much of 20 centimeters (8 inches) of rain fell on the city.
Huaneng Power dropped 8.3 percent to HK$7.94 after Citigroup cut its rating to neutral from buy, while Huadian Power International Co., based in China’s eastern province of Shandong, slid tumbled 8.7 percent to HK$3.77 after being reduced to sell from buy. The bank said China may cut wholesale rates charged by coal-fired power plants.
China Resources Power Holdings Co., a mainland generator owned by state-controlled China Resources (Holdings) Co., slumped 4.5 percent to HK$20.15, the steepest drop on the Hang Seng Index.
Preliminary China manufacturing figures for May will probably remain unchanged at 50.4 from a month earlier, analysts surveyed by Bloomberg said a report from HSBC Holdings Plc and Markit Economics will show tomorrow. A reading above 50 indicates expansion.
Sunny Optical declined 5.4 percent to HK$10.50 after Credit Suisse cut its rating on the stock, saying positives are priced in and investors should take profit.
China Wireless Technologies Ltd., the nation’s second-largest smartphone vendor by market value, dropped 13 percent to HK$3.29, falling for a third day after reaching a two-year high last week.
Among stocks that rose, China Galaxy jumped 6 percent to HK$5.62 from its issue price of HK$5.30.
Futures on the Hang Seng Index declined 0.3 percent to 23,227. The HSI Volatility Index dropped 2.2 percent to 16.32, indicating traders expect a swing of 4.7 percent for the equity benchmark in the next 30 days.