Hong Kong Stocks Fall From 2 1/2-Year High on China Data

Hong Kong stocks slid, with the city’s benchmark index retreating from a 2 1/2-year high, after a China’s services gauge fell and brokerages dropped.

Citic Securities Co., China’s largest brokerage by market value, slumped 4.2 percent after reaching an all-time high yesterday. Li & Fung Ltd., a supplier of toys and clothes to Wal-Mart Stores Inc., slumped 1.9 percent after U.S. retail spending fell following Thanksgiving for the first time since 2009. Sands China Ltd., a unit of billionaire Sheldon Adelson’s Las Vegas gaming company, reached a record high.

The Hang Seng Index fell 0.5 percent to 23,910.47 at the close in Hong Kong, its biggest drop in almost three weeks after yesterday closing at its highest since April 2011. The Hang Seng China Enterprises Index, also known as the H-share index, slid 0.9 percent to 11,448.35.

“We were overbought yesterday in the short term, and people are taking profits now,” said Alex Wong, a Hong Kong-based director at Ample Capital Ltd. “There’s no excuse to buy, so sellers are being more aggressive. We should still be a little bit positive for China’s outlook.”

China’s non-manufacturing Purchasing Managers’ Index fell to 56.0 in November, slowing from 56.3 the month before, the National Bureau of Statistics and the China Federation of Logistics & Purchasing reported today. A reading above 50 indicates expansion in the services industry.

The Hang Seng Index climbed 21 percent from its June low on signs of economic strength in China. The measure traded at 11.41 times estimated earnings, compared with 16.3 for the Standard & Poor’s 500 Index yesterday. The H-share index climbed 29 percent from this year’s low on June 25 after policy makers unveiled the biggest reform package since the 1990s.

Goldman Recommendation

The H-share index will post the biggest gain since 2009 next year, rising to 13,600 on expectations the mainland economy will stabilize, Goldman Sachs Group Inc. said. The investment bank also projected copper futures will fall 13 percent.

Stocks advanced yesterday after government data over the weekend showed China’s Purchasing Managers’ Index of manufacturing activity was 51.4 in November, exceeding 24 out 26 estimates in a Bloomberg News survey. A separate gauge from HSBC Holdings Plc and Markit Economics yesterday topped all 13 analysts’ projections.

Citic Securities slumped 4.2 percent to HK$20.70. China Galaxy Securities Co. retreated 1.4 percent to HK$6.99 after yesterday jumping 11 percent. Brokerages dropped after surging yesterday on expectations they will benefit from a government plan to end a ban on initial public offerings.

U.S. Retail

Futures on the S&P 500 were little changed today. The gauge dropped 0.3 percent yesterday as U.S. manufacturing unexpectedly accelerated in November at the fastest in more than two years, fueling speculation the Federal Reserve will soon start tapering stimulus. Separately, retail purchases fell 2.9 percent to $57.4 billion in the four days from the Nov. 28 Thanksgiving holiday, according to a private survey.

Li & Fung, which relies on the U.S. for most its revenue, lost 1.9 percent to HK$10.42.

Macau Legend Development Ltd. rose 6 percent to HK$7.56. The shares surged to a record yesterday after Hong Kong Economic Journal reported Dynam Japan Holdings Co., which subscribed to $35 million worth of the casino operator’s initial public offering, may boost investment in Macau’s gambling market.

Sands China climbed 2.5 percent to HK$61, while Galaxy Entertainment Group Ltd., the casino operator controlled by billionaire Lui Che-woo, increased 1.6 percent to HK$62.30. Macau gaming revenue rose 21 percent in November from a year earlier, according to official data. The result beat estimates for 18 percent growth from analysts surveyed by Bloomberg.

Bird Flu

Hong Kong reported its first human infection of H7N9 avian influenza, the strain of the virus killed 45 people in China this year. The victim, who had traveled to the mainland Chinese city of Shenzhen, is in critical condition, the government said yesterday. Hong Kong increased its response level to “serious,” requiring hospitals to step up infection controls.

Futures on the Hang Seng Index slid 0.5 percent to 23,908. The Hang Seng Volatility Index dropped 1.2 percent to 15.55, indicating traders expect the benchmark equity index to swing 4.5 percent in the next 30 days.

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