Most Hong Kong stocks fell as developers retreated amid concern China will take further action to curb property price gains, tempering gains by exporters on optimism the Federal Reserve will maintain record stimulus.
China Overseas Land & Investment Ltd., the largest mainland property company traded in Hong Kong, dropped 0.9 percent. Eight stocks fell for every seven that rose on the Hang Seng Composite Index, the city’s broadest equity measure. Li & Fung Ltd., a supplier to Wal-Mart Stores Inc., rose 1.3 percent.
The Hang Seng Index rose less than 0.1 percent to 22,285.52 at the close, halting a four-day slide that brought the gauge down 2.8 percent as China data gave mixed signals about the state of the world’s No. 2 economy. The Hang Seng China Enterprises Index of mainland companies retreated 0.1 percent to 10,537.49, a fifth day of decline and the longest losing streak in almost seven weeks.
“Investors are taking a wait-and-see attitude, waiting for economic figures from China to boost the market,” said Peter Lai, director of sales at brokerage DBS Vickers Hong Kong Ltd. “Property price curbings is a continuous policy of the Chinese government because they don’t want to arouse social disorder. There may be buying at lower levels as Hong Kong is lagging behind global markets.”
About five stocks fell for every four that advanced on the 50-member Hang Seng Index, with volume 14 percent less than the 30-day intraday average. Hong Kong is the only major developed market to decline this year, with the Hang Seng Index falling 1.7 percent through yesterday, as China has dialed back growth forecasts and amid concern the Fed may reduce stimulus.
The equity gauge traded at 10.6 times estimated earnings yesterday, compared with 14.9 on the Standard & Poor’s 500 Index and 13.1 for Europe’s Stoxx 600, according to data compiled by Bloomberg.
Futures on the S&P 500 were little changed today. The gauge advanced 0.6 percent yesterday after Federal Reserve Bank of Atlanta President Dennis Lockhart said central bank officials are committed to record stimulus. A report from the Institute for Supply Management showed manufacturing unexpectedly contracted in May at the fastest pace in four years.
China Overseas slumped 0.9 percent to HK$22.75. Country Garden Holding Co., based in China’s southern province of Guangdong, fell 1.1 percent to HK$4.38.
Beijing has enforced citywide price caps since March by withholding presale permits for any new project asking selling prices authorities deem too high, according to developer Sunac China Holdings Ltd. and realtor Centaline Group. Local officials will push further tightening as they struggle to meet this year’s target of keeping prices unchanged from last year, said Bacic & 5i5j Group, the city’s second-biggest property broker.
Nine Dragons Paper Holdings Ltd., a maker of paper and packaging materials co-founded by Cheung Yan, one of China’s richest women, slumped 7.5 percent to HK$5.28. The company may face more earnings downside risk if paper prices continues to weaken, Credit Suisse Group AG said.
Li & Fung gained 1.3 percent to HK$11.10 while Man Wah Holdings Ltd., a sofa maker that gets half its sales from the U.S., climbed 9.2 percent to HK$9.04. Techtronic Industries Co., a maker of power tools that gets about 73 percent of sales from North America, increased 3 percent to HK$20.90.
Lenovo Group Ltd., the world’s second-largest maker of personal computers, rose 3.3 percent to HK$8.08. The company said it’s in early negotiations for a partnership though it hasn’t entered into any definitive agreement.
Japan’s Yomiuri newspaper reported yesterday, without attribution, that Lenovo and NEC Corp. are in final talks to set up a mobile phone venture. NEC spokesman Seiichiro Toda said no decision has been made on a venture with Lenovo. The Chinese company had the biggest gain on the Hang Seng Index, followed by Wharf (Holdings) Ltd.
Wharf, a Hong Kong shopping mall developer, rose 3.1 percent to HK$71 after JPMorgan Chase & Co. raised its rating to overweight from neutral.
Futures on the Hang Seng Index increased 0.1 percent to 22,023. The HSI Volatility Index fell 3 percent to 16.73, indicating traders expect a swing of 4.8 percent for the equity benchmark in the next 30 days.