Hong Kong Stocks Decline Second Day on Syria, PetroChinaAdam Haigh
Hong Kong stocks dropped, with the benchmark index falling a second day, amid mounting concern a possible military strike on Syria may disrupt the flow of oil. PetroChina Co. and Kunlun Energy Co. slumped after senior managers resigned amid an anti-corruption crackdown in China.
PetroChina lost 4.4 percent after three of its executives under investigation stepped down, including the chairman of Kunlun, which tumbled 14 percent to lead declines on the Hang Seng Index. GCL-Poly Energy Holdings Ltd., the world’s biggest producer of polysilicon for solar panels, lost 2.6 percent after a European Union probe found that Chinese panel makers received subsidies. Zhaojin Mining Industry Co. advanced 5.2 percent as producers of gold climbed after the metal traded near the highest in three months on rising demand for haven assets.
The Hang Seng Index slid 1.6 percent to 21,524.65 at the close, its biggest decline since Aug. 20. All but two shares fell on the 50-member gauge, which is headed for a 2 percent monthly drop amid expected cuts to U.S. stimulus. The Hang Seng China Enterprises Index lost 2.2 percent to 9,765.19.
“Growing geopolitical risks in the Middle East and lingering uncertainty about U.S. monetary policy have combined into the perfect storm,” Matthew Sherwood, Sydney-based head of markets research at Perpetual Investments, which manages about $25 billion, said in an e-mail. “Liquidity is light and markets are likely to keep heading lower.”
The Hang Seng Index retreated 5 percent this year, the second-worst performer among developed markets tracked by Bloomberg. The gauge traded at 10.3 times estimated earnings, compared with 14.8 for the Standard & Poor’s 500 Index and 13.6 on the Stoxx Europe 600 Index.
Futures on the S&P 500 rose 0.3 percent today. The measure lost 1.6 percent in New York yesterday, the biggest drop in nine weeks, as the U.S., France and Britain laid legal groundwork for a military strike on Syria after its government allegedly used chemical weapons on its people. The tension outweighed data showing unexpected consumer confidence.
West Texas Intermediate crude climbed a second day, rising as much as 3 percent to the highest intraday price since May 2011. Libya’s National Oil Corp. said output may have dropped below 200,000 barrels a day, the lowest since the 2011 uprising that toppled Muammar Qaddafi.
PetroChina and Kunlun Energy shares were suspended yesterday amid probes and a wider drive against official corruption by China’s top leadership. PetroChina said three senior managers, including Kunlun Chairman Li Hualin, had resigned and another was ousted. The executives were under investigation for “serious discipline violations,” according to the official Xinhua News Agency.
PetroChina, the mainland’s biggest company by market value, fell 4.4 percent to HK$8.27. Kunlun plunged 14 percent to HK$10.88, its steepest slide in almost five years. The oil and gas producer was downgraded to sell from buy at Citigroup Inc.
The Hang Seng China Enterprises Index, also known as the H-share index, dropped 20 percent from a Feb. 1 high on concern over China’s economy after a two-quarter slowdown in growth. The measure traded at 1.18 times book value, compared with a five-year average of 1.77.
Mounting speculation the Federal Reserve will taper bond buying has weighed on equities in recent weeks. The central bank is expected to pare asset purchases in September by $10 billion to a $75 billion monthly pace, according to economists surveyed by Bloomberg on Aug. 9-13.
Chinese manufacturers of crystalline silicon photovoltaic panels benefited from preferential lending, taxes and other aid, a European Commission official said yesterday. The inquiry into alleged unfair Chinese trade in the sector may lead to increased tariffs. GCL-Poly slid 2.6 percent to HK$1.86.
Gold producers advanced as the precious metal gained a fifth day. Prices rose to $1,423.95 yesterday, the highest since May 15. Zhaojin Mining rose 5.2 percent to HK$7.35. Zijin Mining Group, China’s No. 1 gold miner, advanced 3.2 percent to HK$1.95.
Dongfeng Motor Group Co. slumped 4.9 percent to HK$10.92. Its joint venture with Honda Motor Co. will recall 408,069 vehicles in China due to defective shock absorbers, according to a statement on the General Administration of Quality Supervision, Inspection & Quarantine’s website. The shares fell even after the mainland automaker’s profit beat estimates.
Hang Seng Index futures fell 1.4 percent to 21,506. The HSI Volatility Index gained 6.8 percent to 20.73, the highest since July 12, indicating that traders expect the equity gauge to swing 5.9 percent in the next 30 days.