Chinese Shares in Hong Kong Drop After Mainland CPI Data

Chinese shares listed in Hong Kong slid as investors weighed data showing mainland inflation grew at the slowest pace in 18 months. Great Wall Motor Co. declined.

China Unicom (Hong Kong) Ltd., the nation’s No. 2 mobile carrier, sank 2.7 percent to lead declines on the Hang Seng Index. Great Wall tumbled 17 percent as the maker of sport-utility vehicles resumed trading after pushing back sales of its new flagship Haval H8 for the second time this year. Sands China Ltd. and Galaxy Entertainment Group Ltd. both rebounded more than 5 percent as fears of a cash-card crackdown in Macau eased.

The Hang Seng China Enterprises Index of mainland stocks traded in Hong Kong, also known as the H-share index, slid 0.5 percent to 9,684.58 at the close. The Hang Seng Index added 0.1 percent to 21,862.99, after falling as much as 0.6 percent earlier. The gauge dropped 1.8 percent this week.

“The market is concerned about the continuing slowdown of the Chinese economy, that’s why Hong Kong isn’t having a strong rebound,” said Ben Kwong, director of brokerage KGI Asia Ltd. “Investors were hoping for fresh stimulus, but it seems the central government is being very selective and moderate.”

The Hang Seng Index has fallen 6.2 percent this year while the H-share gauge is down 10 percent amid concern China won’t meet its 7.5 percent growth target. The government is confident of achieving the goal, Premier Li Keqiang said yesterday at the World Economic Forum on Africa in Nigeria. The Hang Seng Index traded at 10.1 times estimated earnings today, compared with 15.9 for the Standard & Poor’s 500 Index yesterday.

Slowing Inflation

China’s consumer price index rose 1.8 percent from a year earlier in April, the National Bureau of Statistics said today in Beijing. Economists surveyed by Bloomberg had expected a 2.1 percent increase after 2.4 percent acceleration in March. Data this week showed services-industry growth slowed in April, while exports unexpectedly increased.

Futures on the S&P 500 lost 0.1 percent today after the the U.S. equity benchmark index slid 0.1 percent yesterday. The Nasdaq Composite Index dropped 0.4 percent, with Inc. and E*Trade Financial Corp. pacing declines as the Internet selloff continued.

The slump in technology shares this week has been led by Twitter Inc., which is poised for an 18 percent slump. An exchange-traded fund of social-media companies fell for eight of the past 12 days amid concern that user growth is slowing and valuations have become excessive.

China Unicom dropped 2.7 percent to HK$12.38, its first decline in four days after reaching its highest close since Oct. 21 yesterday. China Mobile Ltd., the world’s biggest phone company by users, fell 0.9 percent to HK$74.50, retreating from its highest in more than three months.

Knocking Noises

Great Wall tumbled 17 percent to HK$27.25, the biggest decline since October 2008. The company, led by billionaire Chairman Wei Jianjun, said yesterday it suspended H8 sales after reports of “knocking noises” when the SUV was driven at high speeds. Great Wall will hold off until it is able to ensure the vehicle is of a “premium standard,” it said, without specifying a date.

China’s coal producers declined after Jefferies Group LLC maintained its underperform rating on the sector, saying earnings will get worse as inventories increase amid a slowdown in the world’s second-largest economy. China Coal Energy Co., the nation’s second-largest producer of the fuel, slipped 1.2 percent to HK$4.27. Yanzhou Coal Mining Co. dropped 1.7 percent to HK$5.77.

Casinos Rebound

Casino stocks rebounded after analysts said worries over a crackdown on illegal money transfers may be overblown and won’t affect gambling demand. Sands China climbed 5.8 percent to HK$55.60 after sliding 4.6 percent yesterday. Galaxy Entertainment rose 5.6 percent to HK$58.50.

“The reported clampdown on UnionPay card usage will have no real impact on gaming demand as the clampdown is targeted at illegal use of mobile payment terminals and it has nothing to do with legally-installed UnionPay systems at watch stores, pawnshops etc,” D.S. Kim, a Hong Kong-based analyst at BNP Paribas wrote in a note today.

Cheung Kong Infrastructure Holdings Ltd., controlled by billionaire Li Ka-shing, rose 2.8 percent to HK$51.95 after joining the battle for Envestra Ltd. with a cash bid that values the Australian natural-gas distributor at A$2.4 billion ($2.3 billion).

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