Hong Kong stocks tumbled, dragging the benchmark index down 11 percent from its December peak, after weaker-than-expected manufacturing growth from the U.S. to China fueled a global equities rout.
Lenovo Group Ltd. sank 16 percent after at least five brokerages cut their ratings on the world’s largest maker of personal computers. Cnooc Ltd., China’s biggest offshore fuel explorer, slid 5.4 percent as energy companies fell the most after technology firms among the Hang Seng Composite Index’s 11 industry groups. Li & Fung Ltd., a supplier of toys and clothes that gets most its revenue in the U.S., dropped 2.8 percent.
The Hang Seng Index declined 2.9 percent to 21,397.77, the steepest drop since July 2012 as it reopened after Lunar New Year holidays. Trading volume was 61 percent above than the 30-day intraday average. The Hang Seng China Enterprises Index of mainland Chinese companies, known as the H-share index, lost 3.1 percent to 9,509.65. Both gauges capped their worst start to a year since 2010 last month as the Federal Reserve opted to press on with reductions to monetary stimulus and data pointed to slowing growth in China.
“The Fed’s tapering and weaker macro data is really hurting investor sentiment,” said Teresa Chow, a fund manager who helps oversee $1.5 billion at RBC Investment Management (Asia) Ltd. “Until we see some kind of stabilized macro data, the market will continue to struggle finding a catalyst for a rebound.”
Manufacturing gauges for the world’s two biggest economies are signaling a growth slowdown, which has combined with concerns about slumping emerging-market currencies to erase about $2.9 trillion this year from the value of equities worldwide. The H-share stock measure has tumbled 12 percent in 2014. The Hang Seng Index slid 8.2 percent and its 11 percent drop from the December peak meets some traders’ definition of a correction. China’s markets remain closed until Feb. 7.
Futures on the Standard & Poor’s 500 Index added 0.4 percent today after the measure yesterday slumped 2.3 percent, the most since June. Data showed factory activity in the U.S. expanded in January at the weakest pace in eight months as orders slumped, a sign manufacturing cooled at the start of the year along with the weather.
Li & Fung slid 2.8 percent to HK$10.50, while Techtronic Industries Co., a power-tool maker that gets 73 percent of sales from North America, sank 6 percent to HK$18.84.
A U.K. Purchasing Managers’ Index published yesterday showed manufacturing expanded at a slower pace in January, after a similar Chinese gauge released Feb. 1 in Beijing fell to a six-month low amid slowing production and orders in Asia’s largest economy.
Cnooc declined 5.4 percent to HK$11.54 and China Petroleum & Chemical Corp., also known as Sinopec, slid 3.7 percent to HK$5.95 as oil traded near the lowest price in a week. Materials companies also slid, with Aluminum Corp. of China Ltd., the nation’s biggest producer of the light metal, sliding 4.3 percent to HK$2.67.
The Hang Seng Volatility Index jumped 21 percent to 22.11, its steepest jump since November 2011.
Lenovo tumbled 16 percent to HK$8.41, its biggest drop since January 2009. Brokerages including Morgan Stanley and UBS AG cut their rating on the stock on expectations of negative impact on the company’s earnings profit after its acquisition of Google Inc.’s Motorola Mobility.