Most Hong Kong Stocks Drop on China Housing DataAdam Haigh
Most stocks on Hong Kong’s Hang Seng Index fell as a broad gain in China home prices raised concern the scope for further monetary easing would be limited. GCL-Poly Energy Holdings Ltd. plunged after a unit of China’s sovereign-wealth fund agreed to sell a stake in the company.
GCL-Poly plummeted 12 percent after Chengdong Investment Corp. offered 1.2 billion shares of the largest maker of materials used in solar panels. Zoomlion Heavy Industry Science & Technology Co. retreated 1.6 percent after the machinery maker said a former employee took bribes and sold company secrets. Galaxy Entertainment Group Ltd. led gains on the Hang Seng Index as casino operators advanced after Lazard Capital Markets Ltd. said the rate of growth in Macau may increase.
The Hang Seng Index was little changed at 21,225.88 at the close in Hong Kong after falling as much as 1.1 percent. About two shares fell for each that rose on the 50-member gauge, with volume 7 percent below the 30-day average. The Hang Seng China Enterprises Index slid 0.1 percent to 9,733.54. China’s new home prices rose in almost all cities in May, damping optimism for new stimulus.
“It doesn’t seem like much will get done in the near term,” said Ben Tam, a Hong Kong-based fund manager who helps oversee about $1.5 billion at IG Investment. “Any expansion of policy by the government and central bank will be limited.”
Home prices climbed in 69 of the 70 cities tracked by the government, the National Bureau of Statistics said today. Beijing, Shanghai and the southern business hub of Guangzhou all posted their biggest advances since the methodology for collecting the data was changed in 2011. Separate data showed foreign direct investment fell from a year earlier.
The gauge of mainland stocks, also known as the H-Share index, has fallen more than 20 percent from its Feb. 1 high, meeting some investors’ definition of a bear market. The measure is trading at 7.18 times estimated earnings, compared with the three-year average of 9.5, according to Bloomberg data.
The benchmark Hang Seng index dropped 6.3 percent this year, making Hong Kong the worst performer among developed equity markets, according to data compiled by Bloomberg.
Futures on the S&P 500 Index rose 0.2 percent. The gauge yesterday climbed 0.8 percent as investors weighed economic data with prospects for stimulus cuts. A report showed manufacturers in New York were more optimistic in June, while confidence among U.S. homebuilders surged to the highest in seven years.
Shares pared gains after the Financial Times reported that Federal Reserve Chairman Ben S. Bernanke is likely to signal the central bank is close to scaling back its $85 billion in monthly bond buying when he speaks tomorrow at the close of a two-day policy meeting.
GCL-Poly sank 12 percent to HK$1.84, the biggest decline since October 2011. China Investment Corp.’s subsidiary will sell a 7.75 percent stake in the company at HK$1.87 per share. The stock gained 35 percent this year through yesterday.
Zoomlion retreated 1.6 percent to HK$6.13, its lowest close on record. The maker of construction equipment lost almost half its value in 2013 amid allegations it falsified sales, which the company denied.
Galaxy Entertainment Group Ltd. jumped 6 percent to HK$44.00, while MGM China advanced 7.3 percent to HK$21.20. SJM Holdings Ltd., Asia’s biggest casino operator, rose 2.8 percent to HK$20.35. This month’s growth in Macau could exceed the 13 percent rate in April to May, Lazard analyst Jake Fuller wrote in a report.