Chinese Stocks in Hong Kong Fall to Extend Loss to 10% from Peak

Chinese shares fell in Hong Kong, with the benchmark index dropping 10 percent from this year’s high, as protests in the city added to concern about weakening global economic growth.

Yanzhou Coal Mining Co. and China Coal Energy Co. slid more than 2 percent to lead declines for energy companies. Tingyi (Cayman Islands) Holding Corp., which is partly owned by Ting Hsin International Group, plunged 4.7 percent in Hong Kong amid speculation a tainted lard scandal in Taiwan will hurt food sales. Tasly Pharmaceutical Group Co. decreased 2.2 percent to pace declines for health-care shares in mainland trading.

The Hang Seng China Enterprises Index retreated 0.3 percent at the close. The index entered a so-called correction after sliding 10 percent from a recent high on Sept. 8 amid concern protests over free elections in Hong Kong will hurt the city’s retailers and after the International Monetary Fund cut its forecast for global growth last week.

“We have to watch for global risks,” Sam Hsieh, a fund manager at Fuh Hwa Securities Investment Trust Co., said by phone from Taipei.

The H-shares gauge had gained 24 percent from this year’s low on March 20 through the September peak on optimism stimulus may boost economic growth and as the planned exchange link with Shanghai fueled inflows into Chinese equities.

The Shanghai Composite Index fell 0.3 percent to 2,359.48 at the close. Hong Kong’s Hang Seng Index dropped 0.4 percent. The CSI 300 Index lost 0.3 percent. The Bloomberg China-US Equity Index advanced 0.5 percent yesterday.

Exchange Link

The Standard & Poor’s 500 Index slid 1.6 percent yesterday, capping its worst three-day loss since 2011. Federal Reserve officials said over the weekend that the threat from overseas may lead to interest-rate increases being delayed.

Investors are also concerned about the potential start date for the exchange link, Hsieh said. The China Securities Regulatory Commission may announce the date on Oct. 17, Great Wisdom reported today, citing an unidentified person close to regulator. The regulator has set the start date for Oct. 27, Great Wisdom said.

“Investors will be watching to see if it gets delayed,” Hsieh said.

China’s stocks fell yesterday even after exports increased 15.3 percent from a year earlier, the biggest increase since February 2013. Shipment growth beat the 12 percent median estimate in a Bloomberg survey of analysts. Hong Kong unexpectedly overtook the U.S. in September as the top destination for Chinese shipments. Not everyone is convinced those flows were genuine.

Lard Scandal

“Signs of distortion might have re-emerged in the trade data,” Xu Gao, chief economist at Everbright Securities, said in a note yesterday. “If policy makers overestimate external demand due to these fake trade figures and reduce the efforts to stabilize growth domestically, the outlook for the economy will be very worrying.”

A gauge of drugmakers in the CSI 300 slid 1 percent today, paring gains this week to 2.9 percent, the most among 10 industry groups. Tasly Pharmaceutical slumped the most since Aug. 25.

In Hong Kong, police used chain saws and sledgehammers to clear barricades in the city’s business district erected by pro-democracy demonstrators, hours after Chief Executive Leung Chun-ying signaled he’s losing patience with the protests that are in their third week.

Tingyi posted its biggest loss since May 2012. Ting Hsin’s public image was damaged last November when Wei Chuan Foods Corp.’s edible oils were found to contain a restricted chemical and the company issued an apology as it removed its products from stores. Last month a Ting Hsin supplier Chang Guann was found to have supplied tainted lard for use in the company’s products.

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