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Hong Kong Stocks Snap Two-Day Advance After Chinese Data

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Dec. 10 (Bloomberg) -- Hong Kong stocks slipped, with the city’s benchmark index retreating for the first time in three days, as data showed China’s industrial production rose less than estimated last month.

China Coal Energy Co. fell 2.4 percent, leading declines on the Hang Seng Index, after Macquarie Group Ltd. cut its investment rating on the company. Hong Kong Exchanges & Clearing Ltd. lost 0.9 percent after the bourse operator said it will waive some fees to help smaller brokerages cut costs. China Rongsheng Heavy Industries Group Holdings Ltd., the nation’s largest private shipyard, jumped 8.9 percent after the government said it will increase subsidies to the country’s shipbuilders.

The Hang Seng Index slid 0.3 percent to 23,744.19 at the close. Trading volumes were 35 percent below the 30-day average amid initial public offerings in the city. The benchmark gauge has dropped 1.2 percent since closing on Dec. 2 at the highest level since April 2011. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong declined 0.4 percent to 11,382.16.

“Investors are reluctant to chase the market at these levels,” Andrew Sullivan, a director of sales trading at Kim Eng Securities in Hong Kong, said by phone. “China’s industrial production and retail sales are very important data that could help people position for trading in 2014.”

Chinese factory output increased 10 percent in November from a year earlier, according to data released by the National Bureau of Statistics today. That compares with analysts’ median projection of 10.1 percent in a Bloomberg News survey. Retail sales in the world’s second-largest economy climbed 13.7 percent last month, a separate report showed.

Hong Kong IPOs

Volumes are declining as investors’ funds are probably tied up in IPOs, Kim Eng’s Sullivan said. China Cinda Asset Management Co., one of four funds created in 1999 to buy bad debts from Chinese banks, will start trading on Dec. 12 after raising about $2.5 billion. China Everbright Bank Co. is seeking as much as $2.8 billion in Hong Kong’s biggest first-time share sale this year.

The Hang Seng Index climbed 20 percent from its June low amid signs China’s economy is stabilizing. The measure traded at 11.3 times estimated earnings today, compared with 16.3 for the Standard & Poor’s 500 Index yesterday.

The H-share index, as the gauge of mainland companies listed in Hong Kong is known, jumped 28 percent from this year’s low on June 25, extending gains after China unveiled sweeping reform plans.

U.S. Futures

Futures on the S&P 500 added 0.1 percent today. The gauge rose to a record yesterday as investors weighed the timing of any cuts to Federal Reserve monetary support amid budget negotiations in Washington.

“Investors are cautious ahead of the Fed meeting next week,” Castor Pang, head of research at Core Pacific-Yamaichi Hong Kong Ltd., said by phone. “There will be short-term selling pressure once the Fed starts tapering stimulus.”

Fed policy makers will probably begin reducing $85 billion in monthly bond buying at a Dec. 17-18 meeting, according to 34 percent of economists surveyed on Dec. 6 by Bloomberg, an increase from 17 percent in a November survey. In November, 53 percent predicted a tapering in March, compared with 40 percent in the most recent poll of 35 economists.

Coal Producers

China Coal dropped 2.4 percent to HK$4.92 after Macquarie reduced its investment rating to neutral from outperform. Yanzhou Coal Mining Co., which the brokerage rates as underperform, slid 1.4 percent to HK$7.78.

Hong Kong Exchanges, the world’s third-largest bourse operator by market capitalization, fell 0.9 percent to HK$136.60. The company will scrap subscriber fees for real-time securities market data for the first 10 terminals used by each brokerage from next year, Chief Executive Officer Charles Li said yesterday.

Li & Fung Ltd., a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., decreased 1.8 percent to HK$10.12, the lowest close since May 13, after Morgan Stanley cut its investment rating to underweight from equal weight.

China Rongsheng jumped 8.9 percent to HK$1.22, the highest close since June 18. The government will grant 1,500 yuan ($247) per gross ton for shipping companies to replace obsolete ships, according to a statement posted on the transport ministry website yesterday.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

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