Hong Kong Stocks Drop on Fed Concern Before China MeetingKana Nishizawa
Hong Kong stocks capped their longest losing streak in 11 weeks after U.S. data fueled concern the Federal Reserve may cut stimulus sooner than expected, and before China’s Communist Party meets to plan reforms.
Zhaojin Mining Industry Co., China’s No. 2 gold producer, slumped 2.9 percent as the precious metal headed for its second weekly decline. China Cosco Holdings Co., the nation’s biggest cargo line, sank 5 percent after an executive director came under investigation. China Resources Land Ltd., the second-largest mainland property company traded in Hong Kong, slid 1.9 percent after Shanghai raised minimum down-payments on second homes to control surging prices.
The Hang Seng Index fell 0.6 percent to 22,744.39 at the close, declining a fifth day as three stocks slid for each that climbed. The benchmark gauge dropped 2.2 this week. The Hang Seng China Enterprises Index lost 0.8 percent to 10,390.73.
“The U.S. economic data was quite strong so the market is anticipating the timing of Fed tapering will be much earlier than expected,” said Louis Tse, a Hong Kong-based director at VC Brokerage Ltd. “For China’s meeting starting tomorrow, there may not be many new policies coming out, just details of what the market has already been expecting.”
Futures on the Standard & Poor’s 500 Index gained 0.2 percent today. The equity gauge sank 1.3 percent yesterday on speculation the Fed will pare stimulus after U.S. gross domestic product rose 2.8 percent in the third quarter, beating estimates for a 2 percent advance. Tapering was expected to begin in March, based on the median estimate from analysts surveyed by Bloomberg last month.
Today’s monthly employment report may show U.S. payrolls rose by 120,000 in October after a 148,000 gain in September, while the jobless rate climbed to 7.3 percent.
Zhaojin Mining dropped 2.9 percent to HK$5.71, while Zijin Mining Group Co., China’s largest gold miner, slumped 2.8 percent to HK$1.73. Prices for gold yesterday fell to the lowest since Oct. 17 as investors weighed prospects the Fed will pare stimulus.
The Hang Seng Index advanced 15 percent from this year’s low on June 24 amid signs China’s economy is stabilizing. A non-manufacturing gauge this week jumped to the highest this year after two measures of factory activity climbed. Hong Kong’s benchmark index traded at 10.88 times estimated earnings, compared with 15.78 for the S&P 500 yesterday.
Signs of strength in China’s economy may give President Xi Jinping more confidence to tackle reforms at the Communist Party’s third plenary session, with the focus shifting to more sustainable growth, according to the Xinhua News Agency.
China’s exports rose 5.6 percent in October from a year earlier, while imports climbed 7.6 percent, the General Administration of Customs said today in Beijing, with both exceeding analyst estimates. Reports on consumer prices, industrial production and retail sales are due this weekend.
Mainland developers slid after Shanghai raised the minimum down-payment for buyers of a second home to 70 percent from 60 percent as house prices in China’s financial hub jumped 17 percent last month. China Resources Land fell 1.9 percent to HK$21.05. Guangzhou R&F Properties Co., a builder in the southern Chinese city, declined 1.5 percent to HK$12.76.
China Cosco tumbled 5 percent to HK$3.58 to lead shipping lines lower. Executive Director Xu Minjie is under investigation, the company said yesterday, without naming the regulator involved. The probe won’t have a “material adverse effect,” the Tianjin, northern China-based shipper said.
Cosco Pacific Ltd., the container-terminal arm of the mainland’s largest shipping group, retreated 2.5 percent to HK$11. China Shipping Development Co. fell 3.4 percent to HK$4.53.
China Cinda Asset Management Co., one of four funds created in 1999 to buy bad debts from the nation’s banks, won approval from Hong Kong’s bourse for an initial public offering to raise as much as $3 billion, according to two people with knowledge of the matter.
Futures on the Hang Seng Index fell 0.3 percent to 22,742. The Hang Seng Volatility Index climbed 1.1 percent to 15.20, indicating traders expect the benchmark equity index to swing 4.4 percent in the next 30 days.