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Hong Kong Stocks Decline to Lowest Close in a Week

Oct. 10 (Bloomberg) -- Hong Kong stocks fell, with the city’s benchmark index falling to its lowest level in more than a week, as Cnooc Ltd. paced losses among energy companies.

The Hang Seng Index dropped 0.4 percent to 22,951.30 as of the close. The gauge plunged 1.2 percent in the 10 minutes through 10:47 a.m., falling to a low of 22,743.47. More than two fell for each that rose on the 50-member index. The Hang Seng China Enterprises Index, also known as the H-share index, slipped 0.4 percent to 10,460.18.

“The Hang Seng Index dropped after breaking the 23,000 level,” said Gavin Parry, managing director of Hong Kong-based brokerage Parry International Trading Ltd. “It looks like a local futures-led decline as U.S. and regional futures didn’t move. We’re hearing it’s a bank hedging out of an options contract.”

Cnooc, China’s biggest offshore oil producer, slipped 1.3 percent to an almost six-week low after crude prices slid. Sa Sa International Holdings Ltd. sank 5.9 percent after Credit Suisse Group AG said the cosmetic retailer’s sales during China’s week-long holiday missed estimates. Skyworth Digital Holdings Ltd. fell 4.2 percent after the television maker reported lower sales.

The Hang Seng Index gained 1.3 percent this year on better-than-expected China economic data and after the Federal Reserve unexpectedly refrained from cutting stimulus. The benchmark traded at 10.99 times estimated earnings, compared with 14.9 for the Standard & Poor’s 500 Index.

Debt Ceiling

Futures on the S&P 500 added 0.8 percent. The U.S. equity gauge gained 0.1 percent yesterday after congressional aides said Republican and Democratic leaders are open to a short-term increase in the $16.7 trillion debt ceiling, the first movement toward averting a U.S. default. Should lawmakers not act by Oct. 17, the country’s borrowing authority will lapse.

U.S. shares also gained after Janet Yellen, the Fed vice chairman and an architect of its stimulus program, was nominated to replace central bank chief Ben S. Bernanke. A partial government shutdown that began Oct. 1 has delayed the release of economic data, making it harder for Fed policy makers to decide when to start paring unprecedented monetary stimulus.

“The uncertainty on Capitol Hill combined with Yellen likely pushes back the case for Fed quantitative easing tapering to early next year,” Sean Fenton, a Sydney-based fund manager who helps oversee about $1 billion at Tribeca Investment Partners, said in a Bloomberg Television interview.

Treasuries Discount

Hong Kong Exchanges & Clearing Ltd. after the close announced it raised the discount for some Treasuries for margin cover requirement because of a possible U.S. default. The change only affects the clearing house for index futures and options, bourse spokeswoman Lorraine Chan said.

A gauge of energy companies posted the biggest decline among the 11 industry groups on the Hang Seng Composite Index. Cnooc slipped 1.3 percent to HK$15.54, the lowest since Aug. 30. PetroChina Co., China’s biggest energy producer, lost 0.8 percent to HK$8.82.

Sa Sa International dropped 5.9 percent to HK$8.20, the most since April 5. Credit Suisse lowered its share-price forecast to HK$9.70 from HK$10.50, saying the company missed its sales growth estimate for the week-long National Day holiday.

Skyworth Digital fell 4.2 percent to HK$3.69. Revenue from televisions dropped 13 percent in September from a year earlier, the company said yesterday.

Chinese brokerages declined after Bank of America Corp. said they will suffer from government efforts to encourage banks to offer asset-management plans to replace wealth-management products. Citic Securities Co., the nation’s biggest brokerage, slipped 1.7 percent to HK$16.46. Haitong Securities Co. fell 2.4 percent to HK$12.14.

“It’s a bad news for brokerages as banks are entering what brokerages are doing now,” said Dai Ming, a money manager at Hengsheng Hongding Asset Management Co. “There will be more competition for brokerages and their earnings will be hurt.”

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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