Most Hong Kong Stocks Fall on U.S. Fed Tapering Outlook

Most Hong Kong stocks fell, with the benchmark index posting its first weekly decline in four weeks, ahead of U.S. employment reports investors will gauge for hints as to when the Federal Reserve will cut record stimulus.

Yue Yuen Industrial (Holdings) Ltd., a shoemaker that gets about 30 percent of its sales from the U.S., slid 3.2 percent after U.S. growth data boosted tapering bets. China Shenhua Energy Co., the nation’s biggest coal producer, dropped 2.3 percent after Shanghai reported record pollution. Tencent Holdings Ltd., Asia’s largest Internet company, led gains on the Hang Seng Index. CSR Corp., China’s biggest trainmaker, rose 1 percent after winning wind-power generator orders.

More than twice as many stocks declined as rose at the close on the 356-member Hang Seng Composite Index. The Hang Seng Index gained 0.1 percent to 23,743.10, capping a 0.6 percent weekly decline. The Hang Seng China Enterprises Index, also known as the H-share index, dropped 0.2 percent to 11,376.17.

“Sentiment is quite cautious before U.S. data as people gauge the timing of stimulus tapering,” said Steven Leung, director of institutional sales at UOB-Kay Hian Holdings Ltd. “China’s economic situation continues to be steady, and financial reform and urbanization may bring new catalysts for investors. There shouldn’t be too much pull back pressure for the market.”

Futures on the Standard & Poor’s 500 Index rose 0.2 percent after the gauge dropped 0.4 percent yesterday. U.S. gross domestic product climbed at a 3.6 percent annualized rate in the third quarter, the strongest since the beginning of 2012. Data today is expected to show the unemployment rate fell to 7.2 last month to match the lowest since 2008.

Tapering Outlook

The Fed has said it needs evidence of sustained recovery before paring stimulus. Policy makers, who next meet Dec. 17-18, will probably wait until March before reducing monthly bond purchases to $70 billion from $85 billion, according to economists surveyed by Bloomberg on Nov. 8.

Yue Yuen slid 3.2 percent to HK$24.10. Techtronic Industries Co., a power-tool maker that relies on North America for 73 percent of sales, slumped 2.7 percent to HK$20.15.

The Hang Seng Index climbed 20 percent from its June low amid signs China’s economy is stabilizing. The measure traded at 11.33 times estimated earnings, compared with 16.03 for the S&P 500 yesterday. The H-share index climbed 28 percent from this year’s low on June 25, extending gains after China unveiled sweeping reform plans.

Data over the weekend may show China’s exports rose 6.5 percent in November from a year earlier, compared with 5.6 percent the previous month. Growth in imports may have slowed to 7 percent from 7.6 percent, according to the median estimate of 29 economists surveyed by Bloomberg.

Economic Reforms

China’s broadest economic reforms since the 1990s will add less than half a percentage point to annual growth this decade, according to 14 of 19 economists surveyed by Bloomberg. Ten analysts say China will need at least a small amount of stimulus to meet the government’s “bottom line” of 7 percent annual expansion in the next five years.

China Shenhua Energy dropped 2.3 percent to HK$25.45, while China Coal Energy Co. retreated 1.8 percent to HK$5.06 as they posted the two biggest declines on the Hang Seng Index.

Shanghai’s government ordered cars off roads after saying air quality surged to the “severe” category, the highest in a six-tier rating system. Masterlink Securities Corp. said worsening pollution may spur a shift away from fossil fuels.

CSR gained 1 percent to HK$7.29 after winning 2 billion yuan ($328.8 million) in wind-power generator orders from China Huadian Corp.

Tech Shares

Tencent rose 2.3 percent to HK$460. The company surged 85 percent this year on earnings growth potential as it boosted online game sales. TCL Communication Technology Holdings Ltd., a handset maker, climbed 5.2 percent to HK$8.29, leading a measure of information technology shares higher on the Hang Seng Composite Index.

Wynn Macau, whose parent said it would spend billions of dollars to build resorts if Japan allows casinos, gained 3.4 percent to HK$32.25. Japanese lawmakers from the ruling Liberal Democratic Party submitted a bill to legalize gaming house to parliament, Hiroyuki Hosoda, the chairman of a cross-party group of pro-casino lawmakers, said yesterday.

Melco Crown Entertainment Ltd. added 1.1 percent to HK$95.50. The joint venture between Macau businessman Lawrence Ho and Australian billionaire James Packer has said it would spend more than $5 billion if it receives permission to build casinos in Japan.

Futures on the Hang Seng Index gained 0.3 percent to 23,762. The Hang Seng Volatility Index advanced 1.5 percent to 16.37, indicating traders expect the benchmark equity index to swing 4.7 percent in the next 30 days.

Before it's here, it's on the Bloomberg Terminal.