Hong Kong H Shares Decline as Developers, NetDragon SlideKana Nishizawa and Eleni Himaras
Chinese stocks listed in Hong Kong fell, erasing yesterday’s gains, as developers slid. NetDragon Websoft Inc. tumbled after Baidu Inc. agreed to buy an app store from the online-game developer.
China Resources Land Ltd. led declines on the benchmark Hang Seng Index after a report property-tax trials in the nation may be expanded. NetDragon tumbled 21 percent, its biggest drop on record. GCL-Poly Energy Holdings Ltd., the world’s No. 1 maker of polysilicon used in solar panels, surged 6.7 percent on China’s plan to boost generation fivefold.
The Hang Seng China Enterprises Index of mainland shares fell 0.3 percent to 9,419.51 at the close in Hong Kong. The Hang Seng Index was little changed at 21,312.38, with almost three stocks falling for every two that rose. Trading volume on the measure was 50 percent lower than the 30-day average.
“People are still cautious about China even after yesterday’s growth numbers,” said Alex Wong, a Hong Kong-based director at Ample Capital Ltd. “U.S. markets remain extremely strong so that would limit the downside in Hong Kong as well.”
China yesterday reported 7.5 percent economic growth in the second quarter, meeting analysts’ estimates. The rate fell from 7.7 percent in the first three months of the year as factory output weakened. The country expects annual growth of slightly more than 7.5 percent, allowing policymakers room to maneuver to meet the target, according to a Securities Times report citing Jia Kang, director of the Finance Ministry’s fiscal science research center.
The Hang Seng China Enterprises Index, also known as the H-share index, has fallen 23 percent from a Feb. 1 high, meeting some investors’ definition of a bear market. The measure traded at 1.14 times the value of net assets, compared with its five-year average of 1.79.
“The market right now is waiting for more news coming out, like a policy announcement from China,” said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong.
Shares on the Hang Seng Index traded at 10.1 times estimated earnings, compared with 15.2 times for the Standard & Poor’s 500 Index and 13.3 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Futures on the Standard and Poor’s 500 Index fell 0.1 percent. The U.S. equity gauge climbed 0.1 percent yesterday as better-than-expected manufacturing data and Citigroup Inc. earnings outweighed disappointing retail sales. Factory activity in the New York region expanded in July at the fastest pace in five months as the area’s industry stabilized.
Li & Fung Ltd., a supplier of toys and clothes to Wal-Mart Stores Inc., climbed 1.1 percent to HK$11.26.
Developers led declines on the Hang Seng Index on speculation the eastern Chinese city of Hangzhou may be the third city in the nation after Shanghai and Chongqing to start a property-tax trial, the China Securities Journal reported yesterday, without saying where it got the information.
China Resources Land dropped 3 percent to HK$21.20. Guangzhou R&F Properties Co., a builder in the southern Chinese city, slid 3.2 percent to HK$10.88. Agile Property Holdings Ltd. declined 2.5 percent to HK$7.90.
Coal shares slid after Shougang Fushan Resources Group Ltd. said it expects “substantial” decline in profit following a slump in prices. The coking-coal producer retreated 6.3 percent to HK$2.68. China Coal Energy Co., the country’s second-largest producer of the fuel, fell 2 percent to HK$3.98.
NetDragon plunged 21 percent to HK$19.04, its biggest drop on record. Search-engine operator Baidu will pay $1.1 billion to buy a 57 percent stake in 91 Wireless Websoft Ltd. from the game designer as it seeks a greater share of the mobile market.
Among stocks that climbed, GCL-Poly Energy surged 6.7 percent to HK$1.92. Solargiga Energy Holdings Ltd., a maker of silicon wafers, jumped 5.1 percent to 41 Hong Kong cents.
China, the world’s biggest maker of solar panels, said it will add 10 gigawatts of the clean energy per year during the next three years, according to a statement from the State Council. The plan would increase the nation’s solar installed capacity to more than 35 gigawatts by 2015.
China Mengniu Dairy Co. rose 5.3 percent to HK$30.85, its highest since November 2007. Shareholders approved a deal to acquire baby-food maker Yashili International Holdings Ltd. for HK$12.5 billion ($1.6 billion). China’s infant-formula market is expected to surge more than 70 percent to 134 billion yuan ($22 billion) by 2015, according to Euromonitor International.
Hang Seng Index futures rose 0.2 percent to 21,259. The HSI Volatility Index slid 1.2 percent to 20.36, indicating traders expect a swing of 5.8 percent for the equity benchmark in the next 30 days.