Hong Kong stocks fell a fourth day, capping the longest weekly losing streak in 4 1/2 years, amid concern a credit crunch for Chinese banks will hamper earnings. Shares pared losses after benchmark money-market rates on the mainland retreated from record highs.
Galaxy Entertainment Group Ltd. fell the most since 2011 after JPMorgan Chase & Co. cut its recommendation on the Macau casino operator founded by billionaire Lui Che Woo. Zijin Mining Group Co., China’s biggest gold miner by market value, sank 6 percent. Industrial & Commercial Bank of China Ltd. reversed losses to rise for the first day this month.
The Hang Seng Index fell 0.6 percent to 20,263.31 at the close in Hong Kong, trimming a drop of 2 percent. The gauge fell 3.4 percent on the week for a sixth weekly decline, the longest such losing streak since October 2008. Volume was 127 percent above the 30-day average. The Hang Seng China Enterprises Index slid 0.3 percent to 9,237.47, paring a 2.4 percent retreat.
“We see a lack of recovery momentum in China,” Tai Hui, Hong Kong-based chief Asia market strategist at JPMorgan Asset Management, which oversees about $1.5 trillion globally, said in a Bloomberg TV interview. “What’s happening in China with the data as well as the liquidity squeeze have added to uncertainty. The government and central bank are willing to let the economy go through some pain.”
The benchmark Hang Seng Index dropped 11 percent this year amid signs China’s economy is losing steam and concern the Federal Reserve will begin to draw down stimulus. Hong Kong is the worst performer among developed equity markets, according to Bloomberg data.
The world’s 10 biggest equity markets slumped yesterday, according to data compiled by Bloomberg. They have fallen in tandem three times in the past two months, accounting for half of such occurrences over the past five years.
The Hang Seng China Enterprises Index, also known as the H-share index, fell 24 percent from its Feb. 1 high. A 20 percent decline considered the threshold for a bear market. The measure traded at 6.8 times estimated earnings, 28 percent below its three-year average. That compares with 14.4 times projected profit for the Standard & Poor’s 500 Index, according to Bloomberg data.
Banking shares pared losses after China’s benchmark money-market rates retreated. ICBC rose 1.1 percent to HK$4.62 after dropping as much as 2.8 percent. Bank of China Ltd. lost 0.3 percent to HK$3.07, reversing a decline of 2.6 percent.
“We see recent share-price weakness as a buying opportunity” to pick up lenders’ stocks, said Simon Ho, a Hong Kong-based analyst at Citigroup Inc. “Valuations have just fallen below the recent trough.”
The one-day repurchase rate dropped 442 basis points to 8.43 percent in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. That’s the biggest drop since 2007. The seven-day rate fell 227 basis points to 8.50 percent. The rates touched record highs yesterday of 13.91 percent and 12.45 percent, respectively.
Casino operators declined after Macau’s government said it will raise the minimum wage. Wynn Macau Ltd. sank 5.9 percent to HK$21.40, while Melco Crown Entertainment Ltd. retreated 5 percent to HK$60.90. Galaxy Entertainment plunged 8.4 percent to HK$39.35, the biggest drop since October 2011. JPMorgan cut the gaming company to neutral from overweight.
The HSI Volatility Index climbed 1.8 percent to 23.12, the highest level in a year, indicating options traders expect swings of 6.6 percent on the benchmark equity gauge in the next 30 days. Hang Seng Index futures contracts expiring this month lost 0.1 percent to 20,185.
Futures on the S&P 500 added 0.6 percent. The U.S. equity gauge fell 2.5 percent yesterday in New York, posting its biggest loss since November 2011. About 9.4 billion shares changed hands yesterday on U.S. exchanges, the highest volume of the year, according to data compiled by Bloomberg.
The central bank will probably taper $85 billion in monthly bond buying later in 2013 and halt purchases mid-2014 as long as the world’s largest economy performs in line with projections, Fed Chairman Ben S. Bernanke said on June 19.
Zijin Mining sank 6 percent to HK$1.58 as gold futures dropped to $1,273.20 an ounce after tumbling 6.4 percent yesterday.