Hong Kong Stocks Close Little Changed After Weekly Gain

Hong Kong’s benchmark stock index closed little changed, trading near the highest level since December, as casinos dropped and Chinese developers advanced.

Sands China Ltd. dropped 2 percent, the biggest decline on the Hang Seng Index, after capping its largest weekly gain in three months. Li Ning Co. tumbled 8.6 percent after Bank of America Corp.’s Merrill Lynch said the sportswear maker may report a first-half loss. China Resources Land Ltd. and China Overseas Land & Investment Ltd. climbed at least 1.6 percent, pacing gains among developers, on speculation some Chinese cities will ease property curbs.

The Hang Seng Index closed little changed at 23,540.92, after sliding as much as 0.5 percent and rising 0.2 percent. Trading volume was 36 percent lower than the 30-day average. The gauge climbed 1.4 percent last week. The Hang Seng China Enterprises Index of mainland shares traded in the city, also known as the H-share index, was little changed at 10,487.34.

“People are turning more cautious as the market has gone up a fair bit,” Steven Leung, director of institutional sales at UOB-Kay Hian Holdings Ltd. in Hong Kong, said by phone. “Investors are waiting for further indicators to see whether the Chinese economy has more momentum.”

Hong Kong’s benchmark stock measure rebounded 11 percent through last week from this year’s low in March as Chinese policy makers unveiled targeted measures to bolster growth. Asia’s largest economy is due to report trade and inflation data this week.

Full-year growth will meet the government’s 7.5 percent goal, the China Securities Journal reported today, citing Jia Kang, director of the Finance Ministry’s Research Institute for Fiscal Science.

U.S. Futures

Futures on the Standard & Poor’s 500 Index slid 0.2 percent today. The measure advanced 1.3 percent to a record in last week’s shortened trading after jobs data topped estimates. U.S. markets were closed July 4 for the Independence Day holiday.

International Monetary Fund Managing Director Christine Lagarde yesterday signaled a cut in the institution’s global economic growth forecasts, saying investment is still weak and that risks remain in the U.S. even as its rebound accelerates.

“The global economy is gathering speed, though the pace may be a bit less than we previously predicted because the growth potential is lower and investment” spending remains lackluster, Lagarde told the Cercle des Economistes conference in Aix-en-Provence, France. Asia’s emerging economies will avoid a hard landing, she said.

Macau Legend

Casino shares retreated. Sands China slipped 2 percent to HK$59.90 after capping its third weekly advance last week. Galaxy Entertainment Group Ltd. lost 1.2 percent to HK$65.65 after jumping 11 percent last week.

Macau Legend Development Ltd. declined 3.4 percent to HK$5.33 after Apple Daily reported that the company has yet to receive approval for new gaming tables. The application was submitted in December, according to the newspaper.

Li Ning tumbled 8.6 percent to HK$5.56, the biggest decline since March 25. Company may report a first-half loss as some distributors are unable to make payments on time, Merrill Lynch analysts Raymond Ching and Chen Luo wrote in a note today.

Shares of Chinese developers advanced after the China Times reported yesterday that Wuhan city plans to relax rules on local residents’ purchase of third homes. Two phone calls to the Wuhan housing authority went unanswered. Cities such as Hohhot and Jinan have said they may consider easing home-purchase limits.

Developers Rally

China Overseas Land rose 1.7 percent to HK$20.65. China Resources Land gained 1.6 percent to HK$15.40. Country Garden Holdings Co., controlled by billionaire Yang Huiyan, climbed 1.7 percent to HK$3.54.

Railway stocks advanced today. China Railway Group Ltd. jumped 3.6 percent to HK$4. CSR Corp. rose 4.5 percent to HK$6.53. The National Development and Reform Commission approved a plan to construct 436 kilometers (271 miles) of inter-city railways with a total investment of about 50 billion yuan ($8 billion), Shaanxi Daily reported July 4, citing the provincial planning body.

The Hang Seng Index eked out a 1 percent gain this year through last week, the third-worst performer among 24 developed markets tracked by Bloomberg. The H-share index fell 3 percent in the period and traded at 7.3 times estimated earnings, compared with 15.5 times on a MSCI index of global developed and emerging equities.

“China is so very, very cheap,” Mark Matthews, Singapore-based head of Asia research for Bank Julius Baer & Co., which oversees about $377 billion, said in a Bloomberg TV interview. “There are enough good stories here in Asia. Money should be looking to invest here.”

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