Hong Kong Stocks Fall on Slowing Chinese Manufacturing Growth
Hong Kong stocks fell, with the Hang Seng Index posting is biggest two-day slide in almost a month, as Chinese manufacturing grew at its slowest pace since 2009.
Cnooc Ltd. (883), China’s biggest offshore oil producer, retreated 4.3 percent after an index of mainland factory production fell for the first time in three months. Anhui Conch Cement Co., China’s second-biggest producer of the building material by sales, slumped 6.4 percent. Standard Chartered Plc (2888), the U.K.’s No. 2 lender, declined 4.5 percent in Hong Kong after Greek Prime Minister George Papandreou said he’d let voters decide if they will accept Europe’s debt agreement.
The Hang Seng Index dropped 2.5 percent to 19,369.96 at the 4:00 p.m. close in Hong Kong, with five stocks dropping for each that gained in the 46-member gauge. The measure declined 3.2 percent in the last two days, the most since Oct. 4. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong slipped 3.1 percent to 10,184.48 today.
“There’s definitely a slowdown,” Nicholas Yeo, the Hong Kong-based head of China and Hong Kong equities at Aberdeen Asset Management Plc, told Rishaad Salamat on Bloomberg Television’s “Asia Edge.” The firm oversees about $288 billion. “There’s a lot of volatility going on and that’s likely to be the same for the rest of the year as long as we don’t get the clarity on the economic front.”
The Hang Seng Index (HSI) lost 16 percent this year as a slowing U.S. economic recovery, Europe’s debt crisis and China’s efforts to control inflation damped the earnings outlook. The measure last month had its biggest monthly advance since May 2009 as Europe made a breakthrough on a deal to contain the crisis and Beijing hinted it may ease monetary policy.
Eleven of 29 companies in the broader Hang Seng Composite Index that have reported quarterly results since Oct. 11 have missed analyst estimates and just five have exceeded projections.
Stocks dropped after a report showed Chinese manufacturing growth missed economist estimates. The Purchasing Managers’ Index fell to 50.4 from 51.2 in September, the China Federation of Logistics and Purchasing said today in a statement. Economists had predicted 51.8. A reading above 50 indicates expansion.
“The drop in the PMI may shatter investors’ confidence and reignite concerns that earnings in the fourth quarter may be worse than expected,” said Wu Kan, a fund manager at Dazhong Insurance Co., which oversees $285 million. “Stocks may fluctuate at the current level.”
Cnooc slid 4.3 percent to HK$14.60, while Anhui Conch Cement slumped 6.4 percent to HK$27.05. Aluminum Corp. of China Ltd., the nation’s largest producer of the light metal, sank 5.5 percent to HK$4.10 in Hong Kong. Jiangxi Copper Co. decreased 5.3 percent to HK$18.28.
Chinese property stocks dropped after 21st Business Herald reported China Vanke Co., the nation’s biggest developer, will cut prices for a residential project in Beijing.
China Overseas Land & Investment Ltd. (688), the No. 1 mainland developer listed in Hong Kong, tumbled 6.7 percent to HK$13.68, the most on the Hang Seng Index. China Resources Land Ltd. (1109), a state-owned developer, declined 3 percent to HK$11.200. Stocks also fell after Greek Prime Minister Papandreou pledged to put the European Union’s agreement on financing for Greece to a popular vote. The move sparked concern that deals brokered last week to resolve the region’s crisis will collapse. An opinion poll published Oct. 29 showed most Greeks had a negative view of Europe’s accord on a new bailout package.
“There are still a lot of question marks over the viability of the deal that was announced last week,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “There’s still a lot of concern out there how the solvency issue will be solved in Europe. Those question marks certainly forced the equity market to fall overnight.”
Hong Kong stocks tied to Europe slumped. Standard Chartered slid 4.5 percent to HK$179.50. HSBC Holdings Plc, Europe’s biggest lender by market value, dropped 3.9 percent to HK$67.20. Cosco Pacific Ltd. (1199), which operates container facilities at Greece’s Piraeus port, fell 5.6 percent to HK$10.40.
Esprit Holdings Ltd. (330), a clothier that counts Europe as its biggest market, lost 2.1 percent to HK$11.16. Same-store sales in Europe fell 9.2 percent in local-currency terms in the three months ended Sept. 30, Esprit said yesterday. That compares with a 3.1 percent drop for the year ended June 30.
Futures on the Hang Seng Index declined 2.5 percent to 19,301. The HSI Volatility Index jumped 10 percent to 35.34, indicating options traders expect a swing of 10 percent in the Hang Seng Index in the next 30 days.
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