Hong Kong Stocks Fall Most in Seven Months on Fed, China

Hong Kong stocks fell, with the city’s equity benchmark dropping the most since February, amid concern the Federal Reserve may raise rates sooner than anticipated, and after Premier Li Keqiang indicated money-supply growth slowed last month.

China Resources Land Ltd., the second-largest mainland developer listed in Hong Kong, led declines after home sales slid. Sands China Ltd. slipped 2.3 percent as casino shares retreated after Nomura Holdings Inc. said it expects Macau gaming revenue to fall this month. Tencent Holdings Ltd. was the biggest drag on the Hang Seng Index. AAC Technologies Holdings Inc., which supplies speakers to Apple Inc., lost 2.3 percent after the U.S. technology company unveiled new devices.

The Hang Seng Index slid 1.9 percent to 24,705.36 at the close in Hong Kong, with all but two shares declining on the 50-member gauge. Volume on the measure was 15 percent higher than the 30-day average. The Hang Seng China Enterprises Index, also known as the H-share index, sank 2.6 percent to 11,117.89. The city’s markets were shut yesterday for a holiday.

“We’re approaching the end of Fed tapering so investor sentiment has turned a bit cautious, and focus may shift back to interest rates in absence of fresh incentives,” said Ben Kwong, a director at KGI Asia Ltd. “The Hong Kong market is taking a breather after the strong rally in the past few months.”

Credit Constraints

Mainland money-supply growth unexpectedly eased to the slowest in five months in August, comments by Premier Li indicated, a sign of credit constraints as a property slump weighs on the economy. China may report as early as today new credit data. Figures on inflation, retail sales and industrial output are also due this week.

China’s stock rally will evaporate within weeks, Bank of America Corp. strategist David Cui said on Sept. 8. Equities have been buoyed by government efforts to boost sentiment and the planned Hong Kong-Shanghai trading link rather than any improvement in the nation’s economy, Cui said in a speech in Tokyo this week.

The H-share gauge advanced 7.6 percent this quarter amid optimism China will add stimulus amid signs of economic weakness. The index traded at 7.7 times estimated earnings at the close, compared with multiples of 11.4 for the Hang Seng Index and 16.6 for the Standard & Poor’s 500 Index yesterday.

Property Shares

China Resources Land fell 4.8 percent to HK$17.90. China Overseas Land & Investment Ltd., the largest mainland developer listed in Hong Kong, retreated 3.3 percent to HK$22. The nation’s volume of new home sales dropped 35 percent last week from a week earlier, Credit Suisse Group AG said.

Tencent, which in June agreed to buy a stake in 58.com to bolster its online content to compete with Alibaba Group Holding Ltd., fell 3.3 percent to HK$122. Alibaba, China’s biggest e-commerce operator, is meeting this week with potential investors for an initial public offering that could set a U.S. record at $21.1 billion.

Cnooc Ltd., China’s biggest offshore energy explorer, dropped 3.3 percent to HK$15.06, and PetroChina Co. fell 3.5 percent to HK$11.06 as oil traded near an eight-month low.

Fed Tightening

Futures on the S&P 500 fell 0.1 percent. The equity benchmark dropped 0.7 percent yesterday as concerns grew over U.S. monetary policy and a rally in Apple’s shares sputtered.

The Fed is gauging the strength of the economy as it winds down its bond-buying program and considers the timing of raising rates. Policy makers next meet Sept. 16-17. U.S. gross domestic product expanded more than previously forecast in the second quarter, and a report on Sept. 5 showed the economy added fewer jobs than anticipated in August.

Sands China slid 2.3 percent to HK$46.75, while SJM Holdings Ltd. dropped 3.4 percent to HK$18.12. Gaming revenue in Macau may fall as much as 10 percent this month from a year earlier, Nomura said in a report.

Coal producers slid after Xinhua News Agency reported China will “declare war” on pollution, citing Premier Li. China Shenhua Energy Co. fell 3.2 percent to HK$23 and Yanzhou Coal Mining Co. dropped 1.9 percent to HK$6.76.

Apple Unveiling

Apple shares fell 0.4 percent in New York yesterday. The company announced a smartwatch, mobile-payments system, health applications and bigger-screen iPhones in the biggest new lineup so far under Chief Executive Officer Tim Cook. The shares have typically fallen after other events where the company’s products are unveiled. Apple is up 22 percent this year, outpacing the S&P 500’s 7.6 percent gain.

AAC Technologies retreated 2.3 percent to HK$48.85, while FIH Mobile Ltd., which also supplies to Apple, declined as much as 2.1 percent before paring to a loss of 0.7 percent.

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