Hong Kong Stocks Slide, Caps Weekly Drop; Lenovo Gains
Hong Kong stocks fell, sending the benchmark index to its biggest weekly drop since April 5. Developers led the declines, while Lenovo (992) Group Ltd. jumped after saying it’s seeking acquisitions to boost smartphone and tablet businesses.
Lenovo, a computer maker that has $3 billion in cash reserves, advanced 3.8 percent after an executive said there was “no limit” to the size of acquisitions as it expands. Wharf Holdings Ltd. (4), the third-largest developer in Hong Kong by market value, slid 1.6 percent after the shares went ex-dividend. China Overseas Land & Investment Ltd. (688), the largest mainland property company traded in Hong Kong, dropped 1.7 percent, leading developers lower.
The Hang Seng Index slid 0.2 percent to 22,618.67 at the close, with six stocks gaining for every five that fell. The equity gauge yesterday slid 2.5 percent, and capped a 2 percent decline this week. Volume today was 13 percent less than the 30-day intraday average. The Hang Seng China Enterprises Index (HSCEI) of mainland companies dropped 0.2 percent to 10,722.30.
“There may be some technical rebound but sentiment remains cautious,” said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong. “We already had a good move in the past month. In the short- to medium-term the market may go into consolidation.”
The Hang Seng Index, the worst-performing developed-market gauge this year, is down 0.2 percent this year amid signs China’s growth is slowing. The gauge traded at 10.8 times estimated earnings, below its five-year average of 12.6, according to data compiled by Bloomberg.
Lenovo Cash Pile
Lenovo jumped 3.8 percent to HK$7.66. The world’s second-biggest computer maker is holding cash reserves of more than $3 billion, enabling it to pursue acquisitions in smartphones, tablets and hardware, Chief Financial Officer Wong Wai Ming said yesterday.
The Hang Seng Index yesterday dropped by the most since April 5 after a preliminary survey showed China’s manufacturing unexpectedly contracted. Shares also fell on concern the Federal Reserve will scale back stimulus.
Tencent Holdings Ltd. (700), China’s No. 1 Internet company, rose 2.3 percent to HK$299.40 after dropping 3.4 percent yesterday, the most since March 21. Li & Fung Ltd. (494), a supplier to Wal-Mart Stores Inc., rose 0.9 percent to HK$10.98 from a 4.4 percent drop.
Futures on the Standard & Poor’s 500 Index (SPX) dropped 0.1 percent today. The U.S. equity gauge yesterday fell 0.3 percent, its first back-to-back drop in one month, as signs of Chinese manufacturing weaknesses offset American housing data and investors weighed Fed stimulus comments.
Wharf Holdings fell 1.6 percent to HK$72.65. Yesterday was the last day to buy the shares and collect a dividend for the current period. China Overseas Land slumped 1.7 percent to HK$23.10, leading a measure of property developers lower on the Hang Seng Index.
China will expand property tax trials, according to a State Council statement on the central government website today. Mainland-traded developers fell this week after China Securities Journal reported the nation may expand property tax trials to more cities this year.
Potential restrictions on property will put a cap on gains in the industry, Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., said on May 20.
China Huiyuan Juice Group Ltd. (1886), the nation’s biggest juice maker by market share, declined 4.3 percent to HK$3.13. The company said it will buy a concentrates-and-puree maker from its chairman for HK$3.42 billion ($441 million) in new stock.
Futures on the Hang Seng Index rose 0.3 percent to 22,583. The HSI Volatility Index slid 4.8 percent to 17.50, indicating traders expect a swing of 5 percent for the equity benchmark in the next 30 days.
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