Hong Kong Stocks Drop After Jet Shot Down, Gaza Invaded

Hong Kong stocks slid, with the benchmark index paring this week’s gain after a Malaysian passenger jet was shot down over Ukraine and Israel sent troops into Gaza, spurring a global selloff in risk assets.

Hydoo International Holding Ltd., a trade-center operator, tumbled 34 percent after saying its chairman has been unreachable since early this month. Li Ning Co. sank 9.9 percent as the sportswear retailer forecast a first-half loss. Sands China Ltd. extended yesterday’s loss to lead the Hang Seng Index lower. China Overseas Land & Investment Ltd. rose 2 percent amid speculation more mainland cities will loosen property curbs.

The Hang Seng Index fell 0.3 percent to 23,454.79 at the close in Hong Kong, trimming its weekly gain to 1 percent. Trading volume today was 30 percent lower than the 30-day intraday average. The Hang Seng China Enterprises Index, also known as the H-share index, lost 0.3 percent to 10,441.23.

“Any news like the plane crash will trigger short-term pressure for the Hong Kong market,” said Steven Leung, director of institutional sales at UOB-Kay Hian Holdings Ltd. in Hong Kong. “The impact is more on sentiment than fundamentals. The focus is whether the Chinese government is going to loosen policy further.”

A Malaysia Airlines jet was shot down over eastern Ukraine about 50 kilometers (31 miles) from the Russian border, killing all 298 people on board. The government in Kiev said pro-Russian rebels were behind the attack, while the separatists denied the accusation and Russian President Vladimir Putin blamed the Ukrainian government.

China Eastern Airlines Corp. declined 1.6 percent to HK$2.41. The carrier diverted its flight route to avoid Ukraine, citing safety concerns.

Israel Invades

Israel moved troops and tanks into Hamas-controlled Gaza behind heavy artillery shelling, the first significant Israeli ground operation in the area since 2009. The invasion comes after Palestinians launched rocket attacks on Israel and Israeli aerial sorties killed more than 200 Gaza residents.

Futures on the Standard & Poor’s 500 Index rose 0.1 percent. The underlying gauge dropped 1.2 percent yesterday, the biggest decline in three months, and the Chicago Board Options Exchange Volatility Index surged the most since April 2013.

The Hang Seng Index advanced 0.6 percent this year, reversing losses on signs China’s economy is stabilizing after the government deployed targeted stimulus to prop up growth. The gauge traded at 10.9 times estimated earnings, compared with 7.3 for the H-share index and 16.5 for the S&P 500 yesterday.

Growth Pledge

Chinese Premier Li Keqiang reiterated a pledge to maintain the nation’s growth target this year at about 7.5 percent, with an increase in prices of about 3.5 percent, according to a statement citing his remarks at a July 15 meeting.

Hydoo slumped 34 percent to HK$1.58 after resuming trading after being halted from July 2. Chairman Wong Choihing remains unreachable, and Executive Director Huang Dehong is assuming his duties, the company said.

Li Ning dropped 9.9 percent to HK$4.93 after saying it expects a first-half loss of at least 550 million yuan ($88.7 million). Credit Suisse Group AG and UBS AG cut their target pricse on the company following the forecast.

Sands China, controlled by billionaire Sheldon Adelson, fell 2.7 percent to HK$54.25, extending its drop after yesterday posting second-quarter net income that missed analysts’ estimates.

Property Stocks

Chinese developers erased an earlier slide in Hong Kong, while those traded in Shanghai jumped. Minister of Housing Chen Zhenggao urged cities to cut large inventories of vacant housing “with all means,” 21st Century Business Herald reported, citing an unidentified official. Real-estate prices fell last month in 55 of 70 Chinese cities, the National Bureau of Statistics said today. Some Chinese cities started to relax property curbs to stimulate the market, while developers have cut prices since March to lure buyers.

China Overseas Land rose 2 percent to HK$20.70 after falling as much as 1.9 percent. Shimao Property Holdings Ltd., a mainland developer controlled by billionaire Hui Wing Mau, gained 0.7 percent to HK$15.08, reversing a loss of 1.9 percent. In mainland trading, China Vanke Co. and Poly Real Estate Group Co. each climbed at least 2.4 percent.

“With falling home prices, we expect cities to release loosening measures, and this is an opportune time,” said Zhang Haidong, an analyst at Tebon Securities Co. in Shanghai. “Investors expect the property sector to stabilize in the fourth quarter and pull the economy along.”

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