Chinese Stocks Post Record Loss Streak in Hong Kong

A gauge of Chinese stocks in Hong Kong posted its longest losing streak on record amid concern China’s economic slowdown will crimp demand for lending, energy and raw materials. Losses were limited as positive U.S. economic data boosted exporters.

China Construction Bank Corp., the nation’s No. 2 lender, lost 1.1 percent as a cash shortage saw the nation fail to sell all the debt offered at an auction for the first time in 23 months. Aluminum Corp. of China Ltd., the biggest producer of the lightweight metal in the mainland, declined 7.5 percent. China Shenhua Energy Co., the country’s largest coal producer, slipped 2.1 percent. Techtronic Industries Co., which gets about 73 percent of sales from North America, added 2.2 percent.

The Hang Seng China Enterprises Index, also known as the H-Share Index, slid 0.2 percent to 9,667.42 at the close, erasing gains of as much as 1.3 percent and extending losses to a 12th day, the longest losing streak on record. The measure has fallen 21 percent from its Feb. 1 high, exceeding the 20 percent threshold that some investors consider as a bear market. The Hang Seng Index rose 0.4 percent to 20,969.14, after rising as much as 1.3 percent earlier.

“There’s still a concern that growth in mainland China will continue to slow down,” said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong. “Stocks have become more attractive after such a big drop.”

The H-Share Index tumbled 5.1 percent this week, the biggest drop in a year, as the World Bank cut its 2013 growth outlook for China after data released on June 9 showed industrial production trailed estimates in May and exports rose the least in 10 months. Shares on the gauge traded at 7.1 times estimated earnings, compared with the average multiple of 10.8 in the past five years, according to data compiled by Bloomberg.

Worst Performer

The benchmark Hang Seng Index slipped 2.8 percent this week, extending losses for a fifth week, the longest such streak since June 2012. The gauge has fallen 7.5 percent this year, making Hong Kong the worst performer among developed equity markets, according to data compiled by Bloomberg.

Shares on the measure traded at 9.9 times estimated earnings, compared with multiples of 14.8 for the Standard & Poor’s 500 Index and 12.9 for the Stoxx Europe 600 Index.

Futures on the Standard & Poor’s 500 Index swung between gains and losses today. The gauge climbed 1.5 percent yesterday after reports showed retail sales gained the most in three months and the number of claims for jobless benefits declined last week. The Wall Street Journal reported that the Fed may “push back” on market expectations of higher interest rates.

More than $2.5 trillion has been erased from the value of global equities since May 22, when Federal Reserve Chairman Ben S. Bernanke said stimulus efforts may be scaled back if U.S. employment shows “sustainable improvement.”

Liquidity Squeeze

Chinese shares extended losses today following a recent spike in interbank lending rates. China’s Finance Ministry today failed to sell all of the debt offered at an auction for the first time in 23 months owing to a cash squeeze that threatens to exacerbate a slowdown in the world’s second-largest economy.

China Construction Bank slipped 1.1 percent. Industrial and Commercial Bank of China Ltd., the world’s biggest lender by market value, lost 0.4 percent to HK$5.07. Aluminum Corp. of China sank 7.5 percent to HK$2.60. China Shenhua fell 2.1 percent to HK$23.35.

Zijin Mining Group Co., China’s largest gold producer, dropped 3.2 percent to HK$1.81 as bullion headed for a second day of decline.

Exporters advanced. Techtronic, the maker of Ryobi power tools, climbed 2.2 percent to HK$18.60. Man Wah Holdings Ltd., a sofa maker that gets about 51 percent of sales from the U.S., increased 3.6 percent to HK$9.58.

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