Hong Kong stocks slid for a fourth day after the release of conflicting data on China manufacturing and amid concern that the U.S. Federal Reserve will begin winding back stimulus. Shares extended their drop as European equities opened lower.
Aluminum Corp. of China Ltd., the nation’s No. 1 supplier of the light metal by market value, dropped 3.8 percent, leading material companies lower. China Foods Ltd., a maker of beverages, snacks and instant food, slumped 9.2 percent after saying it expects operating profit will fall. Hang Lung Properties Ltd., a developer that gets most of its revenue from Hong Kong, gained 1.7 percent after tumbling 8.1 percent last week.
The Hang Seng Index slipped 0.5 percent to 22,282.19 at the close after rising as much as 0.8 percent. Twice as many stocks declined as rose on the 50-member gauge. The Hang Seng China Enterprises Index of mainland companies fell 0.5 percent to 10,548.13. An official China manufacturing index released June 1 showed a pickup in growth, while separate data today from HSBC Holdings Plc and Markit Economics signaled contraction.
“China is recovering, but it’s not booming,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Ltd., which manages about $51 billion. “Small and mid-sized companies are feeling the challenge of being able to export more. If you’re a value investor, the Chinese market on a relative basis is quite cheap.”
Shares extended losses in late trading as Europe’s markets opened, with the Stoxx Europe 600 Index slipping as much as 1.2 percent today.
Hong Kong is the only major developed market to decline this year. The Hang Seng Index fell 1.2 percent this year through May 31 amid signs China’s growth is slowing as the U.S. Federal Reserve considers tapering its debt-buying program.
The gauge traded at 10.6 times estimated earnings on May 31, compared with 14.8 on the Standard & Poor’s 500 Index and 13.2 on the Stoxx 600, according to data compiled by Bloomberg.
An official manufacturing index released by China showed a pickup in growth, rising to 50.8 in May from 50.6 in April. That beat all estimates in a Bloomberg News survey of 30 analysts. A reading of 50 is the dividing line between expansion and contraction.
A separate manufacturing index by HSBC Holdings Plc and Markit Economics today gave a final May reading of 49.2, a decline from 50.4 in April. The gauge surveys fewer companies and is weighted toward smaller, private businesses.
“Right now, it’s not so convincing whether China’s economy on a whole is doing good,” said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong.
Materials companies declined. Aluminum Corp. slid 3.8 percent to HK$3.04, while United Co. Rusal, the world’s largest aluminum producer, retreated 2.4 percent to HK$3.62.
Zijin Mining Group Co., China’s biggest gold producer by market value, slumped 3.7 percent to HK$2.08 after saying President Luo Yingnan was stepping down for personal and health reasons. Guo Zhiming, director of the miner’s Luoyang Zijin Yinhui Gold Refinery Co. unit, was removed from his post after reporting himself to the police on suspicion of economic crimes, the company said in a separate statement.
China Foods tumbled 8.7 percent to HK$3.56 after saying saying it expects first-half financial results to decrease “substantially” on dwindling operating profits from its wine and kitchen food business.
Citic Pacific Ltd. fell 4.5 percent to HK$8.78 after the steel manufacturer said it was suspending its iron production line in Western Australia for two months to address technical issues.
Futures on the S&P 500 were little changed today. The index dropped 1.4 percent on May 31 as better-than-forecast U.S. data on business activity and consumer confidence bolstered concern the Federal Reserve will scale back stimulus.
A gauge of utilities, which fell 5.7 percent from May 28 through May 31, was the only industry to increase on the Hang Seng Index today. Power Assets Holdings Ltd., the Hong Kong utility controlled by billionaire Li Ka-shing, rose 1.2 percent to HK$69.15.
Hang Lung gained 1.7 percent to HK$27.75.
Futures on the Hang Seng Index declined 0.8 percent to 21,992. The HSI Volatility Index gained 4 percent to 17.25, indicating traders expect a swing of 4.9 percent for the equity benchmark in the next 30 days.