Chinese stocks trading in Hong Kong fell to a one-month low after preliminary data signaled a fourth month of contraction for mainland factory activity, adding to concern the nation may miss its economic-growth goal.
The Hang Seng China Enterprises Index, also known as the H-share index, declined 1.2 percent to 9,905.63 at the close in Hong Kong after rising as much as 0.6 percent. The benchmark Hang Seng Index retreated 1 percent to 22,509.64. The so-called flash Purchasing Managers’ Index for April from HSBC Holdings Plc and Markit Economics met analysts’ estimates with a reading of 48.3 from 48 in March. Readings below 50 signal the manufacturing sector is shrinking.
There are now “expectations that the target of 7.5 percent Chinese GDP growth for this year might be the top end of guidance,” Tony Farnham, an economist at Patersons Securities Ltd. in Perth, said by phone. “The actual growth number may be a little below that.”
The benchmark Hang Seng Index fell 3.4 percent this year while the H-share gauge lost 8.4 percent as mounting signs of slowdown fueled speculation China won’t meet its official target for economic expansion. The Hang Seng Index traded at 10.5 times estimated earnings yesterday compared with 16.1 for the Standard & Poor’s 500 Index.
China Coal Energy Co. was among companies posting the largest declines on the H-share gauge, sliding 3 percent to HK$4.25. China Shenhua Energy Co., the mainland’s largest producer of the fuel by market cap, extended its drop after the factory data were released, retreating 2.3 percent to HK$21.25.
Premier Li Keqiang last week said China isn’t considering “strong” stimulus, and reiterated that economic growth a bit higher or lower than 7.5 percent is within a reasonable range. The government yesterday lowered reserve ratios at some rural lenders.
The National Bureau of Statistics and China Federation of Logistics & Purchasing will publish their own survey of purchasing managers at about 3,000 manufacturing companies. The official gauge’s March reading was 50.3 after falling to an eight-month low of 50.2 in February.
China Mobile Ltd. retreated 2.6 percent to HK$70. The world’s largest phone company by users posted its third straight drop in quarterly profit as expenses for subsidizing Apple Inc.’s iPhone and building networks increased.
China Overseas Land & Investment Ltd., the nation’s biggest developer by market value, lost 3.5 percent to HK$19.34 to lead declines on the Hang Seng Index after posting quarterly earnings.
Sands China Ltd. climbed 2.5 percent to HK$62.60 to lead casino operators higher after CLSA forecast gaming revenue in Macau will double by 2018. Galaxy Entertainment Group Ltd. added 1.5 percent to HK$69.10.
China Resources Power Holdings Co. climbed 2.5 percent to HK$19.46, paring yesterday’s 9.6 percent slump. The company’s parent said it named Fu Yuning to replace Chairman Song Lin after he was removed amid a corruption investigation.
Futures on the S&P 500 were little changed today. U.S. stocks rose yesterday, with the equity gauge posting a sixth day of gains, as health-care shares rallied amid a $45.7 billion bid for Allergan Inc. and earnings from Netflix Inc. to Harley-Davidson Inc. topped estimates.