Hong Kong Stocks Slide to One-Week Low as Retailers Fall

Hong Kong stocks dropped, with the benchmark index sliding to a one-week low amid thin trading as retailers declined on concern the government will restrict visitors to the city.

Wharf Holdings Ltd. fell 3.5 percent to lead declines on the Hang Seng Index on speculation that limits to tourist arrivals being considered by lawmakers would curb spending at its Harbour City and Times Square shopping malls. CSPC Pharmaceutical Group Ltd. sank 6.7 percent after a major stakeholder said it would sell shares at a discount. Inspur International Ltd. jumped 9.4 percent after people familiar with the matter said banks will try servers made by Inspur’s parent company as the Chinese government pushes lenders to remove those made by International Business Machines Corp.

The Hang Seng Index slipped 0.1 percent to 22,944.30, the lowest close since May 21. Volume was 39 percent lower than the 30-day average. The Hang Seng China Enterprises Index, also known as the H-share index, lost 0.4 percent to 10,082.85. A report on China’s industrial profits for April is due tomorrow.

“The market is consolidating as investors are waiting for catalysts,” Jackson Wong, vice president at Tanrich Securities Co. in Hong Kong, said by phone. “There’s a lack of clear direction now and we’re seeing psychological resistance for the Hang Seng Index ahead of 23,000 points.”

The Hang Seng Index rose 3.7 percent this month, the third-best performer among major developed markets tracked by Bloomberg. The Standard & Poor’s 500 Index climbed to a record at the end of last week, closing above 1,900 for the first time, on data showing new-home purchases climbed in April. U.S. markets were closed for a holiday yesterday.

Index Multiples

The Hang Seng China Enterprises Index traded today at 7 times estimated earnings, the lowest among major equity gauges in Asia, data compiled by Bloomberg show. That compares with 10.7 times for the Hang Seng Index and 16.1 on the S&P 500 at the end of last week, the data show.

Premier Li Keqiang said last week China will fine-tune policy when needed to solve problems such as tight liquidity, especially financing difficulties for small companies, according to a statement posted on the central government website.

The comments indicated a significant change in Li’s tone, and may signal incremental stimulus such as looser borrowing conditions and support for the property market, Goldman Sachs Group Inc. economists led by Yu Song wrote in a note dated yesterday.

Tourist Curbs

Wharf Holdings slid 3.5 percent to HK$53.15. Bank of America Corp.’s Merrill Lynch unit cut its rating on the stock to neutral from buy on concern over proposed curbs on Hong Kong visitors. The city may limit tourist arrivals as an influx of mainland Chinese visitors stokes discontent, Chief Executive Leung Chun-ying said today, adding the government is seeking feedback on proposals.

China Resources Enterprise Ltd., which makes the country’s best-selling beer with SABMiller Plc, dropped 2.6 percent to HK$22.35 after the retailer’s equity rating was downgraded at Jefferies Group on disappointing earnings.

Belle International Holdings Ltd. declined 2.2 percent to HK$8.06. The footwear maker is seeking 2014 same-store sales at similar levels to last year, from a previous target of low single-digit percentage growth, and plans to slow the opening of new stores, Radio Television Hong Kong reported, citing Chief Executive Officer Sheng Baijiao.

CSPC Pharmaceutical sank 6.7 percent to HK$6.28. Joyful Horizon agreed to sell 105.9m shares in the drugmaker to True Ally and an additional 600 million shares to third parties at HK$6.25 each, according to a statement to the Hong Kong stock exchange.

IBM Servers

Among stocks that advanced, Inspur International jumped 9.4 percent to HK$1.52. China Postal Savings Bank Co. is using servers made by parent Inspur Group Ltd. as part of a trial program that began in March 2013, according to people familiar with the matter. The government plans to expand that trial to other banks in an effort to replace IBM servers, the people said.

Chinese automakers increased as the government seeks to scrap older vehicles to curb pollution. Dongfeng Motor Group Co. climbed 3.9 percent to HK$11.08. Brilliance China Automotive Holdings Ltd. gained 4.3 percent to HK$12.98. Geely Automobile Holdings Ltd. jumped 4.6 percent to HK$2.93.

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