Hong Kong Stocks Retreat as Casinos, Developers DeclineKana Nishizawa
Hong Kong stocks fell, with the benchmark index declining the most in two weeks, as casino operators and developers slumped. Global Brands Group Holding Ltd. debuted after its spinoff from Li & Fung Ltd.
Sands China Ltd. retreated 2.9 percent after Standard Chartered Plc downgraded gaming stocks. China Resources Land Ltd. slid 1.8 percent as developers extended yesterday’s drop. Tencent Holdings Ltd., Asia’s biggest Internet company, lost 3.3 percent following a selloff in U.S. equity markets. Bank of China Ltd. dropped 2.8 percent after China Central Television alleged the lender violated foreign-exchange regulations.
The Hang Seng Index slid 1.6 percent to 23,176.07 at the close in Hong Kong, its steepest decline since June 23. All but six shares slid on the 50-member gauge. The Hang Seng China Enterprises Index, also known as the H-share index, fell 1.6 percent to 10,341. China today reported inflation data that missed estimates.
“Hong Kong shares are reacting to weakness overnight in the U.S. market,” said Benjamin Tam, a fund manager who helps oversee about $1.5 billion at IG Investment Management (Hong Kong) Ltd. “Today’s data isn’t showing significant improvement and shows demand is still weak. Investors are waiting for stronger figures.”
China’s producer prices fell 1.1 percent in June, the slowest pace of decline for factory-gate prices in more than two years. The figures compares with a 1 percent drop estimated by economists and a 1.4 percent contraction the previous month. Consumer prices rose 2.3 percent, falling short of analysts’ expectations for a 2.4 percent gain after a 2.5 percent increase in May. Reports on mainland trade and credit are due this week.
Global Brands Group, which manages more than 350 labels including Coach Inc. shoes, opened trading at HK$2.09 and slid to HK$1.80. Li & Fung spun off its licensing and brand business to focus on supplying clothes and toys to global retailers including Wal-Mart Stores Inc.
The Hang Seng Index slid 0.6 percent this year, paring a loss of as much as 9.1 percent, as China’s government rolled out stimulus including reserve-ratio cuts to support growth. The measure traded at 10.8 times estimated earnings, compared with 7.2 for the H-share gauge and 16.6 for the Standard & Poor’s 500 Index yesterday.
Goldman Sachs Group Inc. Chief Executive Lloyd Blankfein said prospects for long-term Chinese growth are good and the country can solve shadow-banking and local debt problems, People’s Daily reported.
Sands China fell 2.9 percent to HK$57.25 and Galaxy Entertainment Group Ltd. slid 2.3 percent to HK$62.40 after Standard Chartered cut the casino operators’ equity ratings to inline from outperform. Wynn Macau Ltd., which was reduced to underperform from inline, dropped 4.1 percent to HK$29.55.
Futures on the S&P 500 were little changed. The underlying gauge fell 0.7 percent yesterday to extend a selloff after reaching a record, while the Nasdaq Composite Index lost the most in two months. Raymond James & Associates said stocks are vulnerable and Citigroup Inc. cited concern for a “severe” pullback.’’ Twitter Inc. and Pandora Media Inc., which trade at more than 150 times earnings, plunging at least 7 percent.
Technology shares led declines amid the Hang Seng Composite’s 11 industry groups. Tencent fell 3.3 percent to HK$121.20. Lenovo Group Ltd., the world’s largest maker of personal computers, declined 2.4 percent to HK$10.50.
Mainland developers extended yesterday’s drop, with China Resources Land falling 1.8 percent to HK$15.10 and China Overseas Land & Investment Ltd. retreating 1.7 percent to HK$20.20. Hong Kong real estate companies also fell, with Sino Land Co. sinking 4.2 percent to HK$12.46 to lead declines on the Hang Seng Index.
Hong Kong’s nominal property prices may drop 20 percent by the end of 2016 as low global interest rates and money flows reverse, BNP Paribas SA said in a report.
Bank of China
Bank of China fell 2.8 percent to HK$3.49. Some lenders in the nation help move “dirty money” overseas and violate foreign-exchange regulations, Central China Television reported, without saying where it got the information. Clients can move large sums abroad through a product offered by Bank of China, according to a CCTV, which cited several unidentified bank employees. Calls to the lender’s representative for comment went unanswered.
The Federal Reserve will release minutes from its June meeting today. Policy makers trimmed bond purchases last month by $10 billion for the fifth consecutive time, saying the job market is improving. Goldman Sachs is among investment banks that have pushed forward estimates for when the central bank will raise its key interest rate, with the last increase coming in 2006.