Hong Kong Stocks Slide to Five-Month Low on China Growth Concern

Hong Kong stocks fell, with the benchmark index sliding to its lowest level in five months, as energy and materials companies retreated amid concern that economic growth is slowing in China.

Cnooc Ltd., a state-owned Chinese offshore energy explorer, fell 1.9 percent as oil dropped. Gold producer Zhaojin Mining Industry Co. plunged 3.4 percent as the bullion extended its biggest drop in three decades. Shimao Property Holdings Ltd., a mainland developer controlled by billionaire Hui Wing Mau, gained 3.2 percent on speculation China’s slow economic growth will keep the government from imposing more real-estate curbs.

The Hang Seng Index dropped 0.5 percent to 21,672.03, its lowest close since Nov. 21, after falling as much as 1.4 percent. About three stocks declined for every two that gained in the 50-member gauge. The index slumped by the most in a week yesterday after reports showed Chinese gross domestic product and industrial production grew less than economists estimated.

“At this level, it’s a good time to buy,” said Peter Lai, director of sales at brokerage DBS Vickers Hong Kong Ltd. “Funds are bargain hunting at a low level. People are expecting China’s central government will announce tangible, concrete measures to boost the market.”

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong retreated 0.1 percent to 10,426.56 after falling as much as 1.5 percent.

The Hang Seng Index lost 9 percent from a Jan. 30 high through today as China takes steps to curb property prices and amid concern an outbreak of a new bird-flu virus will become an epidemic.

Relative Valuations

Hong Kong’s benchmark index traded at 10.4 times estimated earnings, compared with its five-year average of 12.5 and the Standard & Poor’s 500 Index’s multiple of 14, data compiled by Bloomberg show. The Hang Seng is trading at its cheapest relative to the MSCI World Index since Bloomberg began collecting data in 2006.

Cnooc slid 1.9 percent to HK$13.48 as crude prices fell to a four-month low. China Oilfield Services Ltd., a drilling provider, fell 2.2 percent to HK$15.06. PetroChina Co., the nation’s largest energy producer, slid 1.9 percent to HK$9.49.

Gold miners sank after the price of the precious metal fell 9.1 percent yesterday, the most since 1983, according to data compiled by Bloomberg. Zhaojin plunged 3.4 percent to HK$8.31. Zijin Mining Group Co., the biggest mining company in China, dropped 1.7 percent to HK$2.29.

Snack Rally

Other materials producers also retreated. Jiangxi Copper Co., the country’s No. 1 producer of the industrial metal, slid 1.9 percent to HK$15.36 for a fourth day of decline. Maanshan Iron & Steel Co., the second-biggest Hong Kong-traded mill, fell 2.1 percent to HK$1.88.

Among stocks that rose, Tingyi (Cayman Islands) Holding Corp., a maker of instant noodles, rose 2.2 percent to HK$20.80 after yesterday slumping the most in four weeks. Snackmaker Want Want China Holdings Ltd. climbed 2.9 percent to HK$11.44 after yesterday declining to its lowest close in more than a month.

A measure of property developers and construction companies had the biggest gain among the Hang Seng Composite Index’s 11 industry groups. Shimao rose 3.2 percent to HK$15.68, while Guangzhou R&F Properties Ltd., a builder in the southern Chinese city, jumped 5.5 percent to HK$13.78.

“Property curbs won’t happen in the near term unless property price rockets,” said Lai. But the “Chinese government doesn’t want to see property prices rising too much too fast.”

Airlines Rebound

While energy producers declined, airlines likely to benefit from lower fuel costs gained. China Southern Airlines Co., the country’s biggest domestic carrier, increased 4.1 percent. to HK$4.03. China Eastern Airlines Corp. advanced 4.8 percent to HK$3.28 and Air China Ltd., the nation’s No. 1 carrier by market value, added 4.2 percent to HK$6.26.

Futures on the S&P 500 Index rose 0.3 percent. The gauge dropped 2.3 percent yesterday, the biggest decline since November. U.S. stocks extended losses as explosions rocked the finish line area of the Boston Marathon. Almost all of the drop came before the incident. Three people were killed and at least 128 hospitalized, police said.

Hang Seng Index futures slid 0.5 percent to 21,667. The HSI Volatility Index fell 1 percent to 17.65, indicating traders expect a swing of 5.1 percent for the equity benchmark in the next 30 days.

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