Hong Kong H-Shares Pare Monthly Gain; Kingsoft Retreats

Chinese stocks listed in Hong Kong slid, reversing earlier gains and paring their biggest monthly advance since November. Kingsoft Corp. dropped after its equity rating was downgraded.

Shandong Weigao Group Medical Polymer Co. retreated 4.2 percent to lead declines among mainland shares trading in the city. Shandong Gold Mining Co. slid for a fourth day in Shanghai as bullion prices touched the lowest since February. Tencent Holdings Ltd. fell 3.1 percent on a report China took temporary control measures over some of the Internet company’s instant-messaging tools. Kingsoft tumbled 12 percent.

The Hang Seng China Enterprises Index, also known as the H-share index, fell 0.1 percent to 10,185.21 at the close in Hong Kong after rising as much as 0.8 percent. The gauge is poised for a 4.1 percent gain this month. The city’s benchmark Hang Seng Index declined 0.3 percent today to 23,010.14. The Shanghai Composite Index lost 0.5 percent to 2,040.60, with more than four shares sliding for each that rose.

“Investors are still looking for other factors that will support the market, such as stimulus from China,” said Sam Chi Yung, a strategist at Delta Asia Securities Ltd. “They’re also waiting for some key economic data.”

Uncertain Recovery

Chinese Premier Li Keqiang said there were still uncertainties and unstable factors in the global recovery, China Central Television reported. He reiterated the government’s proactive fiscal policy and prudent monetary policy, according to the report. The nation is scheduled to release reports on factory activity and services next week.

The H-shares index pared its yearly loss to 5.7 percent through yesterday amid speculation the government would prop up the slowing economy. The gauge traded at 7.1 times estimated earnings, compared with 10.7 on the Hang Seng Index and 16.2 on the Standard & Poor’s 500 Index yesterday. Tomorrow is the last trading day before a three-day weekend.

“Investors are watching out for stimulus from China, whether it will relax its monetary policy,” said Francis Lun, the Hong Kong-based chief executive officer at Geo Securities Ltd. “Investor sentiment has been rather cool. A lot of people are in a holiday mood ahead of Hong Kong’s long weekend.”

Kingsoft Plunges

Kingsoft dropped 12 percent to HK$22.95. after China International Capital Corp. cut its rating on the stock to hold from buy. CCB International downgraded the shares to neutral from outperform.

Shandong Weigao retreated 4.2 percent to HK$7.37, the steepest drop on the H-share gauge. The second-biggest decliner was electric-car maker BYD Co., which dropped 3.1 percent to HK$37.95. Shandong Gold lost 1.4 percent to HK$15.45 in Shanghai.

Futures on the S&P 500 were little changed today after the underlying gauge slid 0.1 percent yesterday. Data today are expected to show the U.S. economy contracted in the first quarter, while a separate report may show jobless claims declined.

Tencent Controls

Tencent dropped 3.1 percent to HK$109.80. China took temporary control measures starting yesterday over some of the company’s instant-messaging services including WeChat and QQ in the Hetian region in the nation’s northwest to counter terrorism, Caixin reported, citing a government notice. The report added that the government will expand controls, which may include key-word searches, over 17 other messaging tools in the region as needed. A People’s Daily commentary published today was critical of WeChat, saying it wasn’t as “pure” as before and citing its focus on advertising.

China Life Insurance Co., the nation’s biggest company in the sector, rose 1 percent to HK$21.15. Morgan Stanley boosted its industry view to attractive on improving fundamental outlook, and upgraded the company to overweight from equal-weight.

A mainland regulator asked banks to control worsening ratios of outstanding bad loans and conduct stress tests, Shanghai Securities News reported, without citing anyone.

— With assistance by Kana Nishizawa, and Shidong Zhang

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