Hong Kong Stocks Drop for Second Day as Casino SharesJonathan Burgos
Hong Kong stocks fell, with the city’s benchmark index dropping a second day, as casino and property companies declined and foreign direct investment in China unexpectedly declined.
Sands China Ltd. slipped 1.4 percent, pacing losses among casino operators after Macau reduced the transit-stay limit for Chinese travelers. New World China Land Ltd. tumbled 17 percent after shareholders rejected its parent’s $2.4 billion plan to take the developer private. Xinyi Solar Holdings Ltd. dropped 7.5 percent after canceling a share sale.
The Hang Seng Index slipped 0.4 percent to 23,203.59 at the close. The Hang Seng China Enterprises Index, also known as the H-share index, lost 0.5 percent to 10,466.65. Non-financial foreign direct investment in China fell 6.7 percent to $8.6 billion in May from a year earlier, the Ministry of Commerce said today. The median forecast in a Bloomberg survey called for a 3.2 percent gain.
“Casino stocks are consolidating as there’s isn’t much news to support gains,” Linus Yip, a strategist at a First Shanghai Securities in Hong Kong, said by phone. “The recent rally in the Hong Kong market may be sustainable given prospects of further stimulus for the Chinese economy.”
Futures on the Standard & Poor’s 500 Index climbed 0.3 percent. The U.S. equity benchmark index added 0.1 percent yesterday as corporate deals and growth in U.S. manufacturing outweighed escalating tension in Iraq.
Data yesterday showed U.S. industrial production climbed more than forecast in May, a sign gains in factory activity are supporting growth as the world’s biggest economy picks up. The Federal Reserve starts a two-day policy meeting today. The central bank will reduce its stimulatory asset-purchase program by $10 billion for a fifth straight month, to $35 billion, according to all 43 economists surveyed by Bloomberg.
Hong Kong’s benchmark index rebounded 9.5 percent since falling to an eight-month low in March, as manufacturing showed signs of strength and China introduced stimulus including reserve-ratio cuts to counter an economic slowdown. The equity gauge traded at 10.7 times estimated earnings, compared with 16.4 for the S&P 500 yesterday.
Casino shares fell after Macau reduced the maximum stay for Chinese citizens using transit visas to five days from seven days. Transit visitors from China who don’t depart for another destination within the five days will be in violation of the new rules, effective July 1, and will be penalized upon their next visit, the city’s Public Security Police Force said yesterday.
Galaxy Entertainment Group Ltd. slipped 1.1 percent to HK$56.75. Sands China lost 1.4 percent to HK$53.10.
New World China slumped 17 percent to HK$5.30. Parent company New World Development Ltd.’s $2.4 billion plan to take its China unit private collapsed after independent shareholders rejected the proposal.
Tencent Holdings Ltd., Asia’s biggest Internet company, lost 0.7 percent to HK$115.60. Alibaba Group Holding Ltd., a Chinese e-commerce company planning to list in New York, said in a revision to its initial public offering prospectus that revenue growth slowed to 39 percent in the quarter through March, from 71 percent in the same period a year earlier. Operating margins narrowed to 45 percent from 51 percent in the prior year, the filing showed.
Among shares that advanced, Yue Yuen Industrial (Holdings) Ltd. jumped 5.4 percent to HK$26.60. Bank of America Corp.’s Merrill Lynch raised its rating on the shoemaker to buy from underperform.