Hong Kong Stocks Fall as Developers Drop; Chalco Slides

Hong Kong stocks fell, with the Hang Seng Index erasing yesterday’s advance, as Chinese developers slid on concern more property curbs will be introduced. Aluminum Corp. of China Ltd. declined after an announcement it will be removed from the city’s benchmark index.

China Resources Land Ltd., a state-owned developer, fell 3.2 percent on a report some mainland cities may slow home-sale approvals. Aluminum Corp. of China, the nation’s leading supplier of the metal, slid 2.8 percent, while Lenovo Group Ltd., the second-biggest maker of personal computers, increased 5.2 percent on its addition to the Hang Seng Index. Digital China Holdings Ltd. surged 9.7 percent after a trading suspension yesterday and as financial firms including HSBC Holdings Plc recommended shares of the electronics distributor.

The Hang Seng Index fell 0.3 percent to 23,177 at the close. About three stocks declined for every two that advanced on the measure, with trading volume about 25 percent above the 30-day average for the time of day. The Hang Seng China Enterprises Index of mainland companies slid 1.4 percent to 11,681.96, its lowest close this year. The Shanghai Composite Index dropped 0.7 percent.

“Investors would like to see whether the new leadership would add any policies to curb home prices,” said Jackson Wong, vice president at Hong Kong-based brokerage Tanrich Securities Co. The Hang Seng China Enterprises Index followed a sell-off of shares listed on the mainland, which are “still at a high point of the recent rally, and investors would like to take profit off the table prior to Chinese New Year.”

New Year Closures

Hong Kong’s market will be shut three days next week for the Chinese New Year holidays, while mainland markets will be closed all week. The Hang Seng Index surged 22 percent from the end of August through January, when the gauge capped its longest monthly winning streak since July 2009. Shares rose amid signs of recovery in the U.S. and China, and as central banks around the globe added stimulus.

The gauge traded at 11.3 times average estimated earnings yesterday, compared with 13.7 for the Standard & Poor’s 500 Index and 12.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

January inflation data is due from China’s statistics bureau tomorrow. Consumer prices probably rose 2 percent from a year earlier, decelerating from a 2.5 percent gain a month earlier, according to the median estimate of 35 analysts in a Bloomberg survey.

Futures on the Standard & Poor’s 500 Index were little changed. The gauge rose 0.1 percent yesterday as better-than-estimated earnings outweighed concern over Europe’s debt crisis before a gathering of euro-area leaders today.

Property Curbs

Some of China’s largest cities may slow approvals for sales of housing units in the first half to slow “momentum” in gains, the China Securities Journal reported without citing anyone.

Measures to curb property prices may be introduced earlier than expected because upward pricing pressure is robust, Kim Eng Securities (HK) Ltd., said in a report today.

China Resources Land slid 3.2 percent to HK$21.15. Guangzhou R&F Properties Ltd., a builder in the southern Chinese city, declined 4.5 percent to HK$13.08. Shimao Property Holdings Ltd., a developer that gets all its revenue from China, slumped 6.6 percent to HK$15.22 after saying Chief Financial Officer Lawrence Hui left to pursue other opportunities.

Aluminum Corp. retreated 2.8 percent to HK$3.53 after Hang Seng Indexes Co. said the company will be removed from the city’s benchmark equity gauge effective March 4. Lenovo rose 5.2 percent to HK$8.87 on inclusion to the index.

China Foods Ltd. tumbled 14 percent to HK$5.75 after the breadmaker said it expects 2012 profit to drop.

Luxury Stocks

Emperor Watch & Jewellery Ltd. slipped 7.1 percent to 91 Hong Kong cents. The seller of high-end timepieces led a drop in luxury stocks amid concerns the industry could be hurt by Beijing’s anti-corruption drive. Hengdeli Holdings Ltd., the retail partner of Swatch Group AG in China, lost 3.4 percent to HK$2.54.

“Investors are concerned that Beijing might clamp down on gift-giving,” Alex Wong, a director at Ample Asset Management said by phone in Hong Kong. China’s media regulator on Feb. 5 ordered radio and television channels to cut advertisements suggesting “gift-giving,” the country’s Xinhua news service reported. The media regulator’s announcement added to those worries, Ample Asset’s Wong said.

Among stocks that rose, Digital China jumped 9.7 percent to HK$11.76. The electronics distributor said it requested an administrative review of a Ministry of Finance penalty for bidding violations. The stock was raised to trading buy from neutral at CIMB-GK Pte, and boosted to overweight from neutral at HSBC.

Futures on the Hang Seng Index dropped 0.2 percent to 23,205. The HSI Volatility Index rose 0.8 percent to 14.22, indicating traders expect a swing of 4.1 percent for the equity benchmark in the next 30 days.

Before it's here, it's on the Bloomberg Terminal.