Hong Kong H-Shares Erase Year’s Gain; Telecoms DeclineKana Nishizawa
Hong Kong stocks fell, with a measure of Chinese stocks traded in the city erasing this year’s gains, after foreign direct investment in China dropped, and ahead of the start of a Federal Reserve policy meeting. The city’s markets were closed in the morning because of a typhoon.
Sinopharm Group Co. slumped 5.2 percent, leading declines on the so-called H-share gauge. China Unicom (Hong Kong) Ltd. and China Mobile Ltd. slid at least 3.8 percent as the telecommunications industry fell the most on the Hang Seng Composite Index. PAX Global Technology Ltd., which sells credit-card payment terminals, tumbled 12 percent after its controlling shareholder sold a stake in the company. Casino companies retreated.
The Hang Seng China Enterprises Index of mainland equities listed in the city, also known as the H-share index, dropped 1.1 percent to 10,718.01 at the close in Hong Kong, bringing its decline for the year to 0.9 percent. The gauge capped a five-day drop of 6.1 percent, its biggest such retreat since June 2013. The benchmark Hang Seng Index fell 0.9 percent to 24,136.01.
“I see further downside,” said Dickie Wong, executive director of research at Kingston Financial Group Ltd. “The major concern right now is about the Fed raising interest rates sooner than market expected. Most economic data from China are not that surprising, but I don’t see any big boost to the local stock market.”
Hong Kong canceled morning stock trading after the city issued its third-highest storm signal for the first time this year for Typhoon Kalmaegi. The city also closed schools and banks, while hundreds of flights were delayed or canceled.
Foreign direct investment into China, a gauge of external confidence, dropped 14 percent in August from a year earlier amid widening antitrust probes into multinational companies, data showed today. Inbound investment was $7.2 billion last month after a 17 percent drop in July.
The H-share measure lost 5 percent from Sept. 8 through yesterday as investors weighed the strength of the mainland economy after reports from industrial output to retail sales missed analyst estimates. The index traded at 7.3 times estimated earnings at the last close, compared with 11.1 for the Hang Seng Index and 16.6 for the Standard & Poor’s 500 Index.
Futures on the S&P 500 slipped 0.1 percent today after the underlying equity benchmark dropped 0.1 percent yesterday. Internet stocks and small-cap shares tumbled, sending the Nasdaq Composite Index near a one-month low, as investors sold some of the bull market’s best-performing shares.
Economic data yesterday showed U.S. industrial production unexpectedly declined in August for the first time in seven months as automakers slowed assembly lines.
Fed policy makers begin a two-day meeting today as they wind down a bond-buying program and consider when to start raising interest rates. The central bank has been saying since March that interest rates would stay low for a “considerable time” after it completes the asset purchases known as quantitative easing.
China Mobile retreated 3.8 percent to HK$94.95 and China Unicom dropped 4.5 percent to HK$13.08. China Telecom Corp. fell 4.9 percent to HK$4.71.
Sinopharm, a Chinese drug distributor, sank 5.2 percent to HK$27.30. Sun Hung Kai & Co., a Hong Kong-based brokerage, tumbled 7.2 percent to HK$5.66, extending yesterday’s slide. Shares dropped yesterday after the company said it sold HK$1 billion ($129 million) of new stock at a discount.
PAX Global sank 12 percent to HK$7.30. Controlling shareholder Hi Sun Technology (China) Ltd. is selling 80 million shares of the company at HK$7.5 each, PAX said. That’s a 9.7% discount to yesterday’s closing price.
Casino operators fell. Sands China Ltd. dropped 3.9 percent to HK$44.20, while Wynn Macau Ltd. slid 3.2 percent to HK25.35. Their share prices are “expensive” as their gross gaming revenue will probably bottom out next year, Morgan Stanley wrote in a note.