Hong Kong Stocks Decline a Third Day on Greek Debt-Swap Concern
Cosco Pacific Ltd. (1199), which operates container facilities at Greece’s Piraeus port, dropped 1.3 percent. Industrial & Commercial Bank of China (601398) Ltd. slid 1.1 percent amid speculation Goldman Sachs Group Inc. will sell its shares in the bank. China Life Insurance Co., the nation’s biggest insurer, sank 6.1 percent after saying profit may have fallen by half last year.
The Hang Seng Index slipped 0.9 percent to 20,627.78 at the 4 p.m. close in Hong Kong. The gauge advanced the past three months, its longest such winning streak in two years, as China cut bank reserve ratios and amid signs the U.S. economy is improving. Volume on the benchmark index today was about 25 percent higher than the 30-day moving average.
“The market needed a healthy correction,” said Yoji Takeda, who oversees about $1.1 billion at RBC Investment Management (Asia) Ltd. in Hong Kong. “I’m not expecting a big drop as the U.S. is continuing to show signs of a recovery. We’ll have to see what happens in Greece in the next couple days but it looks like the debt-swap deal will go through since the bond market is pretty stable right now.”
The Hang Seng China Enterprises Index of mainland companies slipped 1.3 percent to 10,976.49.
Companies that do business in Europe dropped amid concern Greece may not convince enough of its creditors to trade their bonds for new ones, at a loss of as much as 75 percent, before tomorrow’s deadline. The private investors who have so far declared their participation in the swap hold only about one- fifth of the bonds involved.
Cosco Pacific declined 1.3 percent to HK$11.10. Hutchison Whampoa Ltd. (13), owner of ports in Germany and Spain, lost 0.9 percent to HK$75. Standard Chartered Plc (STAN), the U.K. lender that gets about 60 percent of net revenue from Asia Pacific, dropped 3.6 percent to HK$187.90.
ICBC, as China’s biggest lender is known, fell 1.1 percent to HK$5.20 after saying a lock-up period barring the sale of its shares had ended, giving Goldman Sachs the right to sell its stake. The stock slid 3.8 percent yesterday after South China Morning Post reported the U.S. bank approached several institutions about the possibility of selling a “big chunk” of its ICBC (1398) shares.
China Life sank 6.1 percent to HK$20.80, its biggest drop since Oct. 20, after it said 2011 profit may drop by as much as 50 percent because of lower investment yields and impairment losses stemming from swings in the capital market.
“China Life will report one of the weakest headline results among its China peer group,” Barclays Capital analyst Mark Kellock said in a note dated yesterday.
The Hang Seng Index has risen 13 percent so far this year. The rally boosted the price of shares on the gauge to 10.5 times estimated earnings. That compares with 12.9 times for the Standard & Poor’s 500 Index and 10.8 times for the Stoxx Europe 600 Index.
Among stocks that advanced, Want Want China Holdings Ltd. (151), China’s largest maker of rice cakes, jumped 7 percent to HK$8.37, the biggest advance since May 2010. Citigroup Inc. raised its rating on the stock to “buy” from “neutral,” citing the potential for “good sales momentum” in the next few years.
Futures on the Hang Seng expiring this month lost 0.6 percent to 20,569. The HSI Volatility Index gained 1.6 percent to 23.99, indicating options traders expect a swing of 6.9 percent in the benchmark index over the next 30 days.
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