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Hong Kong Stocks Decline After China Manufacturing Data

Traders work on the trading floor of the Hong Kong Stock Exchange in Hong Kong. Photographer: Lam Yik Fei/Bloomberg
Traders work on the trading floor of the Hong Kong Stock Exchange in Hong Kong. Photographer: Lam Yik Fei/Bloomberg

Feb. 20 (Bloomberg) -- Hong Kong stocks dropped, with the benchmark index capping its biggest drop in two weeks, after a Chinese manufacturing gauge slumped. China Petroleum & Chemical Corp. jumped on a plan to seek private investors.

Industrial & Commercial Bank of China Ltd., the nation’s largest lender, slid 2.7 percent as financial companies led losses. Lenovo Group Ltd., the world’s biggest maker of personal computers, dropped 4.5 percent after researcher Canalys said its market share in China declined. China Petroleum soared 9.4 percent to lead gains after saying it’s seeking investors for as much as 30 percent of its oil retail unit.

The Hang Seng Index lost 1.2 percent to 22,394.08 at the close in Hong Kong after rising as much as 0.4 percent. About four stocks declined for each that rose on the 50-member gauge, with trading volume 63 percent more the 30-day average. The Hang Seng China Enterprises Index, also known as the H-share index, retreated 0.8 percent to 9,978.06.

“China’s new leadership wants growth to slow, so we may see data start to moderate though not to depressed levels,” said Teresa Chow, a fund manager who helps oversee $1.5 billion at RBC Investment Management (Asia) Ltd. “Whenever it misses consensus, the market overreacts.”

Hong Kong’s benchmark gauge has rebounded 5.3 percent from this year’s Feb. 5 low amid record new credit in China and improving trade.

ICBC dropped 2.7 percent to HK$4.71, while Shanghai-based Bank of Communications Co. slid 2.7 percent to HK$5.04. Chinese brokerage Citic Securities Co. retreated 3.1 percent to HK$16.72 after Credit Suisse Group AG downgraded its rating on the stock to underperform from neutral.

China PMI

The preliminary February reading of 48.3 for a Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics is a seven-month low. It compares with January’s final figure of 49.5 and the 49.5 median estimate in a Bloomberg News survey of 17 economists. A number below 50 indicates contraction.

Jiangxi Copper Co., China’s biggest producer of the metal, dropped 2.5 percent to HK$13.88, and United Co. Rusal Plc, the world’s largest aluminum producer, retreated 2.1 percent to HK$2.79. Metal prices declined amid concern demand is slowing in China, the world’s biggest user of the commodity.

Lenovo dropped 4.5 percent to HK$8.09 after Canalys said its market share in China slid to 12 percent from 14 percent a year earlier, while rival Samsung Electronics Co.’s share increased and maintained its lead.

WhatsApp Purchase

Tencent Holdings Ltd., Asia’s largest Internet company by market value, fell 3.1 percent to HK$564.50 after Facebook Inc. agreed to buy mobile-messaging start-up WhatsApp Inc.

Futures on the Standard & Poor’s 500 Index slid 0.2 percent today after the measure dropped 0.7 percent yesterday. Fed officials said in minutes of their January meeting that reduction of bond purchases should continue barring a significant change in the economic outlook. They also backed away from their commitment to raise interest rates if unemployment falls below 6.5 percent.

The Fed announced in December it would start paring a record $85 billion of monthly stimulus by cutting bond buying by $10 billion per month.

The IMF, in a staff report prepared for central bankers and finance ministers from the Group of 20, said “significant downside risks remain” for the global economy. The danger of prolonged market turmoil in emerging markets and of deflation in the euro area are threatening the world’s improved economic prospects, it said.

Sinopec surged 9.4 percent to HK$6.62, its biggest gain since December 2008, after announcing plans to seek private investors for its unit. PetroChina Ltd., the nation’s No. 1 energy producer, climbed 2.5 percent.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

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

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