Hong Kong stocks fell, with the benchmark index capping a two-week decline, amid concern U.S. political deadlock will hinder raising the nation’s debt limit. Gaming shares declined after yesterday jumping on higher Macau casino revenue.
Man Wah Holdings Ltd., a sofa maker that gets half its sales from the U.S., declined 2.7 percent. Galaxy Entertainment Group Ltd., the casino operator controlled by billionaire Lui Che-woo, slumped 3.1 percent. Hengdeli Holdings Ltd., the retail partner of Swatch Group AG, dropped 1 percent after the city’s retail sales missed estimates.
The Hang Seng Index lost 0.3 percent to 23,138.54, declining 0.3 percent for the week. About three shares fell for every two that gained on the 50-member gauge, with volume 32 percent lower than the 30-day average. The Hang Seng China Enterprises Index, also known as the H-share index, was little changed today at 10,517.28. Mainland markets are shut until Oct. 8.
“The key overhang is the U.S. debt ceiling issue,” said Teresa Chow, a fund manager at RBC Investment (Asia) Ltd., which oversees $1.5 billion. “If there’s a fast resolution, markets will move on but if it takes long they will be very volatile. We don’t have too many regional issues and China macro data so far has been resilient.”
The Hang Seng Index last week posted its biggest quarterly gain since March 2012, rising 9.9 percent on better-than-expected Chinese data and after the Federal Reserve unexpectedly refrained from cutting stimulus. Hong Kong’s equity benchmark traded at 11.09 times estimated earnings today, compared with 15.12 for the Standard & Poor’s 500 Index.
Futures on the S&P 500 rose 0.1 percent today. The index fell the most in a month yesterday as the Treasury Department said the government will run out of borrowing authority Oct. 17. It also warned that if lawmakers failed to raise the $16.7 trillion debt limit, a default could lead to a recession as bad as the 2008 financial crisis or worse. Service industries in the U.S. expanded in September at a slower pace than forecast.
U.S. payrolls data won’t be released as scheduled today because of the shutdown. A dearth of economic data caused by the stoppage is making it harder for the central bank to gauge when to start paring a record $85 billion in monthly bond purchases.
Companies that rely on the U.S. market fell. Man Wah slid 2.7 percent to HK$12.12. Yue Yuen Industrial Holdings Ltd., which makes shoes for Nike Inc., dropped 0.9 percent to HK$21.80.
Hong Kong’s retail sales by value rose 8.1 percent in August from a year earlier, missing analysts estimates for a 10.1 percent increase. Sales volume climbed 7.2 percent, also short of expectations. Hengdeli slid 1 percent to HK$1.95. Luk Fook Holdings International Ltd., a jewelry seller based in the city, slid 0.6 percent to HK$25.
Gaming shares slid after yesterday surging on higher Macau casino revenue in September. Galaxy slumped 3.1 percent to HK$56.90. SJM Holdings Ltd., Asia’s biggest casino operator, slid 2 percent to HK$21.80. Sands China Ltd., a unit of billionaire Sheldon Adelson’s Las Vegas casino company, lost 0.6 percent to HK$50.30.
Telecommunications shares led declines on the Hang Seng Composite Index. China Mobile Ltd., the world’s biggest phone company by users, sank 2.9 percent to HK$84. Bank of America Merrill Lynch said the carrier’s revenue could fall in 2014 if interconnection fees paid to it by China Telecom Corp. and China Unicom (Hong Kong) Ltd. are halved.
China Telecom sank 1.5 percent to HK$4.06, while China Unicom, the nation’s second-largest mobile carrier, climbed 1.1 percent to HK$13.26. The shares jumped yesterday after Economy & Nation Weekly reported the possible cut in fees.
Steel-manufacturer Citic Pacific Ltd. jumped 9.2 percent to HK$11.14 to lead gains on the Hang Seng Index.
Futures on the Hang Seng Index dropped 0.4 percent to 23,099. The HSI Volatility Index gained 3.8 percent to 17.12, indicating traders expect the benchmark equity index to swing 4.9 percent in the next 30 days.