Hong Kong Stocks Drop, Extending 5-Month Low Before Fed

Hong Kong stocks fell, with the city’s benchmark index extending a five-month low, ahead of a U.S. Federal Reserve meeting starting today. Technology companies led declines.

AAC Technologies Holdings Inc., which supplies speakers to Apple Inc., dropped 4.8 percent after sales of the iPhone over the holiday season missed analysts’ estimates. Hang Lung Properties Ltd., a Hong Kong-based developer, led declines on the Hang Seng Index after HSBC Holdings Plc cut its rating on the stock. Lenovo Group Ltd. rose 5.9 percent after International Data Corp. said it gained smartphone market share.

The Hang Seng Index dropped 0.1 percent to 21,960.64, the lowest close since Aug. 30, having swung between a gain of 0.2 percent and a loss of 0.4 percent. The Hang Seng China Enterprises Index of mainland Chinese companies, known as the H-share index, slid 0.3 percent to 9,763.97. China’s markets will shut from Jan. 31 to Feb. 6 for the Chinese New Year holidays.

“Investor sentiment is still quite cautious ahead of Chinese New Year long holiday and before the Fed meeting,” said Steven Leung, director of institutional sales at UOB-Kay Hian Holdings Ltd. Some stocks may be being bought as the market has slumped recently, he said.

The H-share index tumbled 9.7 percent this year as data on China’s manufacturing and services industries fueled concern the world’s second-largest economy is slowing. The Hang Seng Index sank 5.8 percent for the period, the second-biggest drop among major developed markets tracked by Bloomberg. The stock gauge trades at 9.7 times estimated earnings, the lowest since July.

Chinese Data

Profits at Chinese industrial companies increased 6 percent in December from a year earlier, decelerating from 9.7 percent the prior month, according to a report today.

Huaneng Power International Inc., the listed unit of China’s largest power group, slid 7.1 percent to HK$7.07. The company said profit for 2013 using Chinese accounting standards probably rose more than 75 percent from a year earlier. That compares with the 96 percent increase predicted by analysts, according to data compiled by Bloomberg.

AAC Technologies dropped 4.8 percent to HK$32.95. Apple said yesterday it sold a record 51 million iPhones for its fiscal first quarter ended Dec. 28, missing analysts’ estimates of 54.7 million handsets. The company also said revenue will be $42 billion to $44 billion in the current quarter, compared with analysts’ estimates of $46.1 billion.

Hang Lung

Hang Lung Properties slid 2.8 percent to HK$22.35 after HSBC cut its rating on the stock to neutral from overweight.

Futures on the Standard & Poor’s 500 Index added 0.3 percent today after the gauge dropped 0.5 percent yesterday. The U.S. central bank decided at its December gathering to begin cutting its monthly bond buying by $10 billion to $75 billion. Fed policy makers, who start a two-day meeting today, will probably cut another $10 billion from their monthly bond-buying program, according to the median estimate of economists surveyed by Bloomberg this month.

In Hong Kong, exports for December were unchanged from a year earlier, a report showed yesterday, missing the 3.6 percent increase estimated by economists. Imports climbed 1.8 percent, compared with the 3 percent median estimate of 11 economists in Bloomberg News survey.

Among stocks that rose, Lenovo added 5.9 percent to HK$10.48, the steepest gain on the Hang Seng Index. The company boosted market share in 2013 to finish among the top five smartphone vendors, according to Framingham, Massachusetts-based researcher IDC.

BYD Co., a maker of electric vehicles, surged 7.7 percent to HK$37.65. Chinese Premier Li Keqiang, visiting a unit of BYD, said governments should take a leading role in promoting alternative energy-powered vehicles, according to a statement posted on the central government’s website yesterday.

Hanergy Solar Group Ltd. gained 3.8 percent to HK$1.10 after saying it won $780 million of contracts. Tencent Holdings Ltd. added 2.8 percent to HK$503 after Xinhua News Agency reported the Internet company will promote WeChat in the U.S.

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