Hong Kong Stocks Fall Most in Five Weeks as Developers Retreat

  • Wharf, Sun Hung Kai decline after leading gains in July
  • Crude trades below $40 a barrel, weighing on energy producers

Hong Kong stocks fell the most in more than five weeks as investors cashed out of some of last month’s best performers and a slump in crude prices dragged down energy producers.

The Hang Seng Index dropped 1.8 percent at the close, its biggest loss since June 24. Sun Hung Kai Properties Ltd., which had its best month in July in almost five years, declined, as did shopping-mall operator Wharf Holdings Ltd. HSBC Holdings Plc was the only riser as it announced a share buyback aimed at reversing a share slump. Cnooc Ltd. retreated the most since Feb. 11 as U.S. oil traded below $40 a barrel. The Shanghai Composite Index lost 0.2 percent.

The selloff in property shares comes after optimism that the housing market is recovering made real estate companies some of the biggest gainers on the Hang Seng Index in July. Slumping crude prices are weighing on stocks globally, with the MSCI All-Country World Index declining for a third day. Hong Kong’s retail sales fell 8.9 percent in June from a year earlier, government data showed Tuesday, more than the 8.1 percent slide that analysts projected.

"We had been in good run, and with a pullback in other parts of the world, we’re following suit," said Alex Wong, who helps oversee about $100 million at Ample Capital Ltd. "In the very short term, we may see some more downside. We have seen the first round of selling off today in property stocks, and that probably means people are cashing out as they had a good run last month and were a bit overstretched."

The Hang Seng Index slid to 21,739.12, with a measure of property companies sliding 3.2 percent for its steepest fall since Jan. 21. Wharf fell 5.8 percent, the most on the benchmark index, with Bocom International Holdings Co. saying worse-than-expected retail sales in Hong Kong are weighing on its shares. Sun Hung Kai Properties declined 4.1 percent, while New World Development Co. sank 3.5 percent. The Hang Seng China Enterprises Index retreated 1.7 percent. 

Cnooc lost 4.4 percent. West Texas Intermediate crude has tumbled 5 percent over the past two sessions and last traded at $39.52 a barrel. Huaneng Power International Inc., China’s biggest listed power generator, fell 3.1 percent after saying profits slumped 31 percent in the first half.

HSBC, which has the second-biggest weighting on the Hang Seng Index, climbed 1.6 percent, leaving it as the only gainer on the 50-member index. The lender announced a $2.5 billion share buyback for this year as second-quarter pretax profit slumped 45 percent from a year earlier.

Hong Kong’s stock market was closed on Tuesday due to a typhoon.

Two-Day Run

Shanghai’s benchmark index gained for a second day to 2,978.46. A gauge of the mainland’s overall business activity by Caixin Media and Markit Economics stood at 51.9 for July, better than the 50.3 for June, aided by expansion in manufacturing.

The China Financial Futures Exchange is planning changes that would loosen curbs on trading in the country’s stock-index futures market, people familiar with the matter say. The proposals include lowering margin requirements and allowing non-hedging accounts to open 100 new positions a day on a single contract. China Cifco Investment Co., a financial services provider, surged by the 10 percent limit in Shenzhen following the news.

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