Hong Kong’s benchmark stock index fell for a second day, as investors await data to assess China’s economy and after comments signaling the Federal Reserve may soon pare stimulus.
Tencent Holdings Ltd., China’s No. 1 Internet company, slumped 4.1 percent after reaching a record high yesterday. AAC Technologies Holdings Inc., a maker of acoustic components that gets most of its revenue from the U.S., dropped 1.8 percent. PetroChina Co., the nation’s No. 1 energy producer, fell 2.7 percent after crude prices declined yesterday. Biostime International Holdings Ltd., a baby-product maker, surged as it resumed trading after being suspended.
The Hang Seng Index declined 1.5 percent to 21,588.84 at the close, its steepest decline since July 3. U.S trade data beat estimates yesterday and Fed Bank of Chicago President Charles Evans said he “would clearly not rule” out dialing back asset purchases in September. China trade figures are due tomorrow, followed by an inflation report on Aug. 9.
“The Fed’s comment is making the market nervous, but it’s also being used as an excuse to take profit,” said Ben Kwong, chief operating officer at KGI Asia Ltd. Upcoming Chinese data is “keeping investors on the sidelines. Sentiment turned a bit cautious. We still need to see whether the central bank will continue to add liquidity.”
The People’s Bank of China conducted 12 billion yuan ($1.96 billion) of seven-day reverse-repurchase agreements at a yield of 4 percent yesterday, according to its website. Reverse repos were auctioned the past two weeks for the first time since February, alleviating a funding squeeze that drove interbank lending rates to the highest in a month.
All but two stocks declined on the 50-member Hang Seng Index, with volume 17 percent lower than its 30-day average. The Hang Seng China Enterprises Index lost 2.1 percent to 9,446.38 today.
Shares extended declines in afternoon trading as China’s Shanghai Composite Index reversed earlier gains, and as Japan’s Nikkei 225 Stock Average tumbled on a stronger yen.
“China’s market turned from positive to negative, and the huge rise in the yen triggered profit-taking across the board,” said Jackson Wong, vice president of Hong Kong-based brokerage Tanrich Securities Co.
Tencent dropped 4.1 percent to HK$360.20, the biggest drag on the Hang Seng Index, followed by HSBC Holdings Plc, which slid 1.2 percent to HK$84.10.
HSBC, Europe’s largest bank, yesterday accounted for more than half the index’s point decline after missing earnings estimates. Chief Executive Officer Stuart Gulliver said a slowdown in emerging markets was hurting profit.
Futures on the Standard & Poor’s 500 Index fell 0.5 percent after the benchmark gauge dropped 0.6 percent yesterday, its biggest decline since June 24. The U.S. trade deficit narrowed in June to the lowest since October 2009 as oil imports fell and companies shipped more goods abroad. The Fed has said any reduction is stimulus will be tied to sustained improvement in the economy.
AAC Technologies slumped 1.8 percent to HK$35.95. Yue Yuen Industrial Holdings Ltd., a shoemaker that gets 29 percent of sales from the U.S., dropped 1.2 percent to HK$21.30.
China’s trade growth may continue to slow in the second half, according to a report by the State Information Center published in China Securities Journal. Overseas shipments are expected to have gained 2 percent in July from a year earlier, compared with a 3.1 percent decline the previous month, according to economists surveyed by Bloomberg.
Crude prices for September delivery fell 1.2 percent in New York yesterday. PetroChina slid 2.7 percent to HK$8.80. Cnooc Ltd., China’s biggest offshore oil company, dropped 1 percent to HK$13.88.
The Hang Seng Index retreated 4.7 percent this year, the worst performer among major markets tracked by Bloomberg. The Hang Seng China Enterprises Index, also known as the H-share index, had fallen as much as 27 percent in June from a Feb. 1 high, meeting some investors’ definition of a bear market.
MGM China Holdings Ltd., the Macau casino operator controlled by MGM Resorts International, slumped 4.6 percent to HK$21.85 even after second-quarter profit climbed. The company is less well-positioned than rivals to expand market share, Barclays Plc wrote in a report dated today. The investment bank maintained its overweight weighting on the stock.
Country Garden Holding Co., a developer based in China’s Guangdong province, slid 4.3 percent to HK$4.41 after yesterday closing at its highest in almost three months. Maybank Kim Eng Holdings Ltd. suggested selling the stock as valuations become less compelling.
Biostime jumped 6.5 percent to HK$44.50 after resuming trading today. The shares slumped 3.6 percent yesterday before being suspended pending the results of a probe into milk-powder pricing. The company was fined 162.9 million yuan by a regulator for anti-monopoly violations, according to a statement to the Hong Kong bourse.
The stock is “rallying today because of clarity on the fines, with no more non-systematic risks in the short-term,” according to Tracy Sun, an analyst at Oriental Patron Holdings.
SPG Land (Holdings) Ltd., a residential builder in China, surged 19 percent to HK$1.83 after Caixin Online reported that Greenland Holding Group Co. plans to list hotels and overseas businesses in Hong Kong. SPG Land said in May it will sell a controlling stake to Greenland.
Hang Seng Index futures fell 1.4 percent to 21,543. The HSI Volatility Index rose 6.8 percent to 17.26, indicating traders expect a swing of 4.9 percent for the equity benchmark in the next 30 days.