Hong Kong’s H-Shares Near Bear Market on China OutlookAdam Haigh
Hong Kong stocks fell, with a gauge of Chinese shares listed in the city touching a 20 percent decline from a Dec. 2 peak, after brokerages from UBS AG to Bank of America Corp. cut China growth forecasts amid further signs of an economic slowdown.
The Hang Seng China Enterprises Index, also known as the H-share index, slid 0.8 percent to 9,244.30 as of 1:05 p.m. in Hong Kong. The gauge earlier fell as much as 1 percent and was poised to close 20 percent below a recent high, considered by some traders as entering a bear market. The Hang Seng Index lost 1.1 percent to 21,519.38, heading for a 5 percent loss this week, the biggest such retreat since May 2012.
“China’s growth is already moderating and corporate profits continue to be rather disappointing,” said Mikio Kumada, who helps oversee more than $25 billion as Hong Kong-based global strategist at LGT Capital Partners. There are “legitimate concerns about future profitability.”
Economists at UBS, Bank of America, JPMorgan Chase & Co. and Nomura Holdings Inc. cut estimates for Chinese economic growth after disappointing data fueled speculation the nation may not meet its 7.5 percent expansion target for 2014.
BYD Co. lost 3.2 percent to HK$51.60, with the electric-car maker the biggest decliner on the H-share gauge after China Citic Bank Corp.
Tencent Holdings Ltd. lost 5.2 percent to HK$557.50 and China Citic declined 6.9 percent before suspending trading. Both firms, which were to offer virtual credit cards, dropped on a report that the People’s Bank of China suspended such products.
Ping An Insurance (Group) Co. dropped 1.8 percent to HK$60 after China’s second-biggest insurer missed profit estimates.
New World Development Ltd., controlled by the family of Hong Kong billionaire Cheng Yu-tung, plunged 15 percent to HK$8.18 after proposing to privatize its China property unit for HK$18.6 billion ($2.4 billion).
Reports yesterday showed China’s factory output grew in January and February from a year earlier at the slowest pace from a year earlier since 2009. Aggregate financing in China decreased to 938.7 billion yuan ($153 billion) last month amid a crackdown on shadow lending, data this week showed. That compares with January’s record 2.58 trillion yuan and missed the 1.31 trillion yuan median estimate of analysts surveyed by Bloomberg News. Chinese exports slid the most since 2009 last month, a separate report showed.
The H-share gauge traded at 6.3 times estimated earnings yesterday and the Hang Seng Index had a multiple of 9.9, compared with 15.7 for the Standard & Poor’s 500 Index.
Futures on the S&P 500 rose 0.1 percent. The equities benchmark yesterday fell 1.2 percent, erasing this year’s gains, as the China data and tension in Ukraine outweighed reports showing an improving U.S. economy.