Hong Kong stocks slid, with the benchmark index paring its biggest weekly gain since September, as developers fell. Tencent Holdings Ltd., Asia’s largest Internet company, dragged the index lower after yesterday jumping the most in a month.
China Overseas Land & Investment Ltd. declined for a second day, falling 1.7 percent. Mainland developers surged earlier this week after the central bank directed lenders to expedite home loans. Luxury-home maker Sunac China Holdings Ltd. dropped on plans to buy a stake in Greentown China Holdings Ltd. Johnson Electric Holdings Ltd. dropped the most since 2009 after the manufacturer of micromotors said it expects lower profit. Tencent fell 1.9 percent.
The Hang Seng Index fell 0.1 percent to 22,712.91 at the close in Hong Kong, paring this week’s gain to 3.9 percent. The Hang Seng China Enterprises Index, also known as the H-share index, slid 0.2 percent to 9,955.35. The small-cap ChiNext Index of mainland shares slid more than 20 percent from its February peak on concern valuations are too high.
“The Hang Seng Index rose quite a lot recently and so without positive news on China’s economy it’s hard to rise further,” said Steven Leung, director of institutional sales at UOB-Kay Hian Holdings Ltd. in Hong Kong. “The market may have overreacted at the beginning of this week on China’s policy loosening.”
The H-share index has declined 8 percent this year as concern about China’s economy weighed on investor sentiment. The gauge traded at 6.9 times estimated earnings, compared with 10.4 for the Hang Seng Index and 15.9 for the Standard & Poor’s 500 Index yesterday.
Chinese banks had the biggest quarterly increase in bad loans since 2005 as lagging economic momentum caused defaults to rise. Non-performing loans rose by 54 billion yuan ($8.7 billion) in the three months through March to 646.1 billion yuan, the highest level since September 2008, according to data released by the China Banking Regulatory Commission yesterday.
A report today showed foreign-direct investment in China rose 3.4 percent from a year earlier last month, to $8.7 billion. FDI for the first four months of the year increased 5 percent to $40.3 billion.
Tencent fell 1.9 percent to HK$106.50. Want Want China Holdings Ltd., a snack and beverages maker, dropped 6.4 percent to HK$11.20, its steepest drop since October 2011. It was the biggest decline on the Hang Seng Index today.
China Overseas Land, which jumped 12 percent in the five days through May 14, declined 1.7 percent to HK$19.24 today. China Resources Land Ltd. fell 1.8 percent to HK$15.30. The People’s Bank of China on May 13 told the nation’s biggest lenders to expedite mortgages. Industrial & Commercial Bank of China Ltd. will accelerate the approval process for home loans, according to a Xinhua report this week.
Futures on the S&P 500 slid 0.1 percent after the underlying gauge dropped 0.9 percent yesterday. Investors continued to sell small-cap shares and Wal-Mart Stores Inc. forecast profit that missed estimates. Economic data showed industrial production in the U.S. unexpectedly declined in April, held back by a broad-based decrease in manufacturing and a plunge in utilities as temperatures warmed.
Labor Department data showed the fewest Americans in seven years filed for unemployment benefits last week, while a separate report indicated the cost of living in the U.S. rose in April by the most in almost a year.
Greentown China climbed 2.8 percent to HK$8.03 after Sunac China said it plans to buy a stake of as much as 30 percent in the developer. Both stocks were suspended from trading yesterday. Sunac dropped 6.5 percent to HK$3.86.
Johnson Electric tumbled 17 percent to HK$6.44. The company expects operating margins and net profits in fiscal 2015 to be lower than high levels achieved in fiscal 2014, it said. It reported full-year profit yesterday that missed analyst estimates.