Hong Kong H-Shares Reach One-Month Low on China ExportsAdam Haigh
Hong Kong stocks declined, with a gauge of Chinese shares falling to a one-month low, as weaker-than-estimated trade data fueled concern that the world’s second-largest economy would fail to meet its growth target.
Jiangxi Copper Co. declined 3.3 percent as futures for the industrial metal slumped. Galaxy Entertainment Group Ltd. lost 3.2 percent as casino operators slid. China Resources Cement Holdings Ltd. dropped 5.3 percent after reporting earnings that missed estimates. China Southern Airlines Co. retreated 3.8 percent after the carrier said it sold seven tickets for a Malaysian Airline System Bhd. flight that has gone missing.
The Hang Seng China Enterprises Index, also known as the H-share index, slid 1.8 percent to 9,536.85 at the close in Hong Kong, the lowest since Feb. 5. The benchmark Hang Seng Index fell 1.7 percent to 22,264.93. The CSI 300 Index, which tracks the largest Chinese companies, slumped 3.3 percent, its lowest close since February 2009.
“The trade data was quite weak,” David Gaud, a money manager who helps oversee about $120 billion at Edmond de Rothschild Asset Management, said in a Bloomberg TV interview. “Based on what we’ve been given so far this year on the macro numbers in China, you’re not able to get to 7.5 percent growth at the end of the year, meaning you’re going to need fiscal stimulus. You’re going to see monetary policy that is going to have to be loosened and that could be the major surprise in China.”
Mainland exports unexpectedly slid 18.1 percent in February from a year earlier, the most since 2009, compared with analysts’ estimates for a 7.5 percent increase, according to a March 8 government report. Inflation eased to a 13-month low. China last week retained a target for 7.5 percent growth in 2014 for the $9 trillion economy. Gross domestic product expanded 7.7 percent in 2013, the same pace as in 2012.
Goldman Sachs Group Inc. is sticking with its recommendation to buy Chinese stocks, the biggest decliners worldwide this year, after valuations fell to the lowest level in a decade compared with global peers.
The H-share gauge traded at 6.4 times estimated earnings and the Hang Seng Index had a multiple of 10 today, compared with 16 for the Standard & Poor’s 500 Index and 14.4 for the Stoxx Europe 600 Index on March 7, according to data compiled by Bloomberg.
Kinger Lau, a strategist at Goldman Sachs, predicts the H-share index will climb 24 percent to 12,000 in the next 12 months. The brokerage’s December projection was for the gauge to surge to 13,600 by the end of 2014.
China’s leaders are trying to balance clampdowns on the shadow-banking industry and local-government debt with measures to support economic growth. Investors are watching the ongoing People’s National Congress for further signs of reform.
Shanghai Chaori Solar Energy Science & Technology Co. became the first onshore company to default on a bond after failing to make a full interest payment last week.
The HSI Volatility Index, which tracks expected swings on the Hang Seng Index implicit in options prices, climbed 8.8 percent to 18.420, the most in a week.
Futures on the S&P 500 slid 0.4 percent, indicating the U.S. equities benchmark will retreat from a record high when trading starts in New York. U.S. shares rose last week as data showing stronger-than-forecast jobs growth outweighed concern the situation in Ukraine could worsen.
Copper producers were dragged lower as the price of the material in Shanghai fell by the 5 percent daily limit. Jiangxi Copper declined 3.3 percent to HK$12.44. Zijin Mining Group Co. retreated 1.7 percent to HK$1.70.
China Resources Cement plunged 5.3 percent to HK$5.37 after reporting a rise in full-year net income to HK$3.34 billion, missing the HK$3.43 billion estimate of 13 analysts surveyed by Bloomberg. Anhui Conch Cement Co. dropped 5.4 percent to HK$27.35.
Casino shares fell. Galaxy Entertainment slid 3.2 percent to HK$73.15, while MGM China Holdings Ltd. declined 2.1 percent to HK$31. SJM Holdings Ltd. dropped 2.8 percent to HK$24.45.
China Southern Airlines slumped 3.8 percent to HK$2.50. Malaysia stepped up efforts to locate the jet that may have crashed in the Gulf of Thailand with 239 people on board. The lost flight was a codeshare with China Southern.