Hong Kong Stocks Drop as China Property Developers Slide
China Resources Land Ltd., the second-largest mainland property company traded in Hong Kong, dropped 3.5 percent after the southern Chinese city of Shenzhen said property buyers must have at least a 70 percent down-payment for their second homes. Tingyi (Cayman Islands) Holding Corp., a maker of instant noodles and beverages, fell 3 percent after surging 11 percent last week. Shunfeng Photovoltaic International Ltd. (1165), a maker of solar cells, surged 19 percent after announcing an acquisition plan.
The Hang Seng Index fell 0.3 percent to 23,189.62 on trading volume that was 27 percent below the 30-day average. The Hang Seng China Enterprises Index of mainland shares listed in the city advanced 0.1 percent to 10,686.06 after a gauge of China’s non-manufacturing industries rose.
“Chinese property shares are being dragged down by the news of down-payment in Shenzhen, which is huge,” said Jackson Wong, vice president of Hong Kong-based brokerage Tanrich Securities Co. “There might be more micro policies to fine-tune the current property measures. China’s focus is more on the quality of growth and not gross domestic product, and we really can’t quantify that.”
The Hang Seng Index (HSI) jumped 17 percent from this year’s low on June 24 as data from China signaled the world’s second-largest economy is stabilizing. The nation’s non-manufacturing Purchasing Managers’ Index climbed to 56.3 in October from 55.4 in September, a government report showed yesterday. The increase follows better-than-estimated readings for two manufacturing indexes last week.
The Hang Seng Index, on which gains this year have been led by gaming shares and China’s biggest Internet company, traded today at 11.1 times estimated earnings, compared with 15.9 for the Standard & Poor’s 500 Index on Nov. 1.
Shunfeng Photovoltaic jumped 19 percent to HK$6.36 after saying its unit agreed to buy Wuxi Suntech Power Co. for 3 billion yuan ($492 million). GCL-Poly Energy Holdings Ltd. (3800), the world’s biggest producer of polysilicon for solar panels, gained 4.3 percent after a Chinese-language industry website reported the company’s business will improve this quarter, citing company management.
China’s top party officials will meet in Beijing from Nov. 9-12 to map out a blueprint for reform. The nation’s current economic policy aims for long-term and sustainable development, instead of short-term effects, the China Securities Journal reported, citing Finance Minister Lou Jiwei as saying on Nov. 2 at a meeting.
“Investors are concerned about China’s economic reform as the policy will focus on improving the quality of the economy rather than the growth rate,” said Sam Chi Yung, a strategist at Delta Asia Securities Ltd. in Hong Kong. “There will be more rumors until the upcoming policy meeting.”
Property buyers in the southern Chinese city of Shenzhen are required to have at least a 70 percent down-payment for their second homes, according to a statement posted on the website of the central bank’s Shenzhen office last week. New home prices in September rose 20 percent in Shenzhen and Guangzhou, data showed last month.
The nation’s real-estate bubble poses a “danger” to the economy and the government should combine property controls with economic reform of land and tax policies, according to a front-page editorial published today by the China Securities Journal.
China Resources Land sank 3.5 percent to HK$21.90. China Overseas Land & Investment Ltd. (688), the biggest mainland developer listed in Hong Kong by market value, slipped 1.3 percent to HK$23.50.
Of the index members that have reported quarterly earnings this season, 75 percent posted higher profit than analysts estimated, data compiled by Bloomberg show. Futures on the gauge added 0.2 percent today. Fed Bank of Dallas President Richard Fisher said in Sydney today that the U.S. central bank should end its record stimulus as soon as possible.
China may remove a freeze on new listings on its domestic stock market after the leadership meeting later this week, Boming Cheng, president of Citic Securities Co., said in an interview. The nation suspended IPOs in October 2012 due to volatility in the stock market and investor concern about the financial reporting of newly-listed companies.
Jewelry retailer Luk Fook Holdings International Ltd. (590) halted trading pending a possible acquisition announcement.
Tingyi (Cayman Islands) Holding Corp., a maker of instant noodles and beverages, fell 3 percent to HK$22.60, the second-biggest drop on the Hang Seng Index.
Futures on the Hang Seng Index fell 0.4 percent to 23,170. The Hang Seng Volatility Index climbed 1.3 percent to 14.49, indicating traders expect the benchmark equity index to swing 4.2 percent in the next 30 days.
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