Hong Kong Stocks Fall Third Day on Chinese DevelopersJonathan Burgos
Hong Kong stocks fell, with the city’s benchmark index capping its longest losing streak in eight weeks, as Chinese developers declined amid concern the government will take more steps to cool the property market after record gains in home prices.
Country Garden Holdings Co. slid 2.6 percent to lead declines among mainland developers. Huaneng Power International Inc. tumbled 9.4 percent after a newspaper reported China may cut electricity prices in October. ZTE Corp., the mainland’s second-largest maker of equipment for phone networks, gained 2.5 percent after the government announced plans to boost spending on fiber optics and faster wireless networks.
The Hang Seng Index dropped 0.2 percent to 22,463.70 at the close in Hong Kong, declining a third day. Almost two shares fell for each that rose on the 50-member gauge. The measure gained 3.3 percent last week, the most since November, as China shares rallied on signs the world’s second-largest economy is stabilizing.
“We’re seeing some profit-taking after last week’s rally, said Ben Kwong, chief operating officer at KGI Asia Ltd. ‘‘Investors are relatively cautious on concern the Chinese government will do something to cool the property market. I think that’s just an excuse to take profit.”
The Hang Seng China Enterprises Index, also known as the H-share index, fell 0.2 percent to 10,199.08. China’s new home prices rose the most since January 2011 in the nation’s four major cities, led by 17 percent jumps in Guangzhou and Shenzhen.
Mainland developers declined. Country Garden dropped 2.6 percent to HK$4.91. China Overseas Land & Investment Ltd., the biggest mainland homebuilder traded in Hong Kong, slipped 2.2 percent to HK$24.15. Agile Property Holdings Ltd., the real estate company partly owned by JPMorgan Chase & Co., fell 2.8 percent to HK$8.36.
The Hang Seng Index retreated 0.9 percent this year, the only decline among developed markets tracked by Bloomberg. The gauge traded at 10.72 times estimated earnings, compared with 15 for the Standard & Poor’s 500 Index on Aug. 16. The H-share index fell 17 percent from a Feb. 1 high. The index traded at 1.23 times book value, compared with a five-year average of 1.78.
Chinese stocks were roiled Aug. 16 by a trading error at Everbright Securities Co. that spurred a 53 percent surge in volume and a swing of more than 6 percent in the Shanghai Composite Index. Erroneous buy orders from the brokerage’s proprietary trading group sparked the early rally, the securities regulator said.
Everbright reported a trading loss of 194 million yuan ($31.7 million) and apologized to investors after errors in order-execution systems sparked the biggest intraday swing in China’s benchmark index since 2009. The company gave the wrong price for 10 million yuan of government bonds today, it said on its website.
Hong Kong’s economy expanded more than estimated in the second quarter on consumer spending and investment, prompting the government to raise its forecast for the full-year expansion. The government said that growth this year will be between 2.5 percent and 3.5 percent, after in May estimating a gain of between 1.5 percent in 3.5 percent.
Futures on the S&P 500 were little changed today. The gauge dropped 0.3 percent on Aug. 16 as investors weighed data showing housing starts climbed in July while a gauge of consumer confidence fell.
Data this week in the U.S. will probably show combined purchases of existing and new homes climbed to a 5.64 million annualized pace last month, the fastest clip since November, 2009, according to the median estimate of economists surveyed by Bloomberg.
Materials and energy companies led declines this year on the Hang Seng Composite Index amid concern weaker expansion in China will sap demand. Utility and information-technology shares were the biggest gainers.
The government may cut electricity prices as soon as this October to stimulate industrial power use, the Chongqing Times reported, citing unidentified people close to the National Development & Reform Commission.
Huaneng Power slumped 9.4 percent to HK$7.70. Datang International Power Generation Co. dropped 5.8 percent to HK$3.28. China Resources Power Holdings Co. slid 6.2 percent to HK$17.54 even after reporting first-half earnings that beat analyst estimated.
Among stocks that advanced. ZTE climbed 2.5 percent to HK$14.96. China will boost investments in fiber optics and wireless networks to help stimulate consumption and drive economic growth, according to a statement on the central government’s website on Aug. 17.
Hang Seng Index futures fell 0.3 percent to 22,419. The HSI Volatility Index gained 3.6 percent to 17.47, indicating traders expect the equity benchmark to swing 5 percent in the next 30 days.