Hong Kong Stocks Decline 10-Week Low on China PlenumJonathan Burgos and Yoshiaki Nohara
Hong Kong stocks fell, dragging the benchmark index to a 10-week low, as China’s leaders failed to provide policy details after a summit to map out reforms.
Industrial & Commercial Bank of China Ltd. dropped 3.6 percent, pacing losses among mainland lenders. Tencent Holdings Ltd. sank 4 percent after Chairman Pony Ma reportedly said the valuation of China’s biggest Internet company is “scarily” high. Belle International Holdings Ltd. led declines on the Hang Seng Index after the Chinese footwear maker’s rating was cut at Goldman Sachs Group Inc.
The Hang Seng Index dropped 1.9 percent to 22,463.83, the lowest close since Sept. 4. All but two shares declined on the 50-member gauge. The Hang Seng China Enterprises Index lost 2.7 percent to 10,276.61. China’s Communist Party leaders made scant mention of financial reforms after the plenum ended yesterday.
“Quite a few people put on their positions ahead of the communique, expecting actionable moves to be made, but that wasn’t the case,” said Andrew Sullivan, director of sales trading at Kim Eng Securities in Hong Kong. “The market is just disappointed.”
The Hang Seng Index has advanced 13 percent from this year’s low on June 24 amid signs China’s economy is stabilizing. Hong Kong’s benchmark index traded at 10.73 times estimated earnings today, compared with 15.96 for the Standard & Poor’s 500 Index yesterday.
The document from the meeting of the party’s 18th Central Committee led by President Xi Jinping didn’t discuss specific issues such as regional borrowing, interest rates or the one-child policy, while referring generally to giving farmers more property rights. Markets will be “decisive” in allocating resources, while the state will remain “dominant” in the economy, indicating limits on reducing the government’s role.
“It underwhelmed, replete with visions but short on details,” Hao Hong, a Hong Kong-based strategist at Bocom International Holdings Co., said in an e-mail.
Financial stocks declined. ICBC, as the world’s largest bank is also known, slipped 3.6 percent to HK$5.16. China Construction Bank Corp., the mainland’s second-biggest lender, fell 2.9 percent to HK$5.80.
Futures on the S&P 500 lost 0.2 percent today. The gauge yesterday slid 0.2 percent as earnings and an improving economy fueled speculation stimulus will be reduced next month. The Fed may start tapering in March, with analysts surveyed by Bloomberg on Nov. 8 expecting monthly bond purchases to fall to $70 billion from $85 billion. Dallas Fed President Richard Fisher said in Melbourne yesterday that monetary accommodation “becomes riskier by the day.”
Investors will scrutinize reports this week on U.S. jobless claims and manufacturing in the New York area. Data last week showed the economy grew faster than forecast in the third quarter and hiring rose more than estimated in October.
Tencent dropped 4 percent to HK$392.60 after Chairman Ma told Ming Pao Daily News the shares may fall if the company doesn’t keep up with trends in technology and Internet businesses. The stock fell 12 percent after touching an all-time high on Oct. 21.
The company today may report net income of 4.06 billion yuan ($666 million) for the three months ended Sept. 30, according to nine analysts estimates surveyed by Bloomberg. That compares with 3.22 billion yuan a year earlier.
Belle dropped 4.7 percent to HK$9.48, the lowest close since May 2010. The retailer’s rating was cut to neutral from buy at Goldman, which also lowered its price target for the stock to HK$10 from HK$13.
Yanzhou Coal Mining Co. fell 1.3 percent to HK$7.36. China’s third-largest producer of the fuel was told by Australian regulators to abide by an agreement to reduce its stake in Yancoal Australia Ltd., said two people with knowledge of the matter.
The HSI Volatility Index, which measures the cost of options on the Hong Kong equity gauge, advanced 1.6 percent to 16.39, rising for an eighth day, the longest such streak since January 2001.