China Stocks in Hong Kong Drop for Fourth Day on Growth Concern

  • Insurance, energy companies pace declines for H-share index
  • Hong Kong developers fall after downgrade by Goldman Sachs

Assessing the Health of the Chinese Economy

Chinese stocks in Hong Kong completed their steepest four-day loss in three months, led by financial and energy companies, amid concern a pick up in economic growth is faltering.

The Hang Seng China Enterprises Index fell 0.8 percent, while the Shanghai Composite added 0.2 percent. China Life Insurance Co. slid to a two-month low in Hong Kong, pacing a drop for insurers. New World Development Co. led a slump for developers after Goldman Sachs Group Inc. downgraded Hong Kong property stocks, predicting a 20 percent drop in home prices. A private index of China’s services industry fell to 51.8 in April from 52.2 in March, Caixin Media and Markit Economics said on Thursday.

Caixin’s measure of manufacturing for April underscored pockets of weakness in the Chinese economy, while the government’s gauge missed estimates. The Hang Seng China benchmark, which entered a bull market in March, has fallen nearly 7 percent from an April 21 high.

“The market has been in a consolidation phase as its previous rally, which was based on a rebound in commodity prices and signs of economic stabilization, is starting to taper off,” said Audrey Goh, a strategist at Standard Chartered Plc in Singapore. “We are also going into the summer months, when the market tends to be weaker. We will have to see how corporate earnings improve and economic data stabilizes before investors come back again.”

The Hang Seng China gauge closed at 8,626.73 in Hong Kong. The Shanghai benchmark rose to 2,977.84. The Hang Seng China AH Premium index of the price gap between dual-listed shares in China and Hong Kong climbed for a fourth day, its longest stretch of gains this year.

China Life retreated for a sixth day in Hong Kong, its longest streak of declines since August, while Ping An Insurance Group Co. slumped 1.5 percent. Lower bond yields may erode investment income and force life insurers to set aside more reserves for long-term contracts, Bloomberg Intelligence analyst Steven Lam said on Wednesday.

Commodity Trading

PetroChina Co. fell to a two-week low and Cnooc Ltd. dropped for fifth day, pacing a decline among energy producers in Hong Kong.

The fever that’s gripped Chinese commodity markets is easing. Speculators who traded 1.7 trillion yuan ($261 billion) futures in a single day last month have retreated as fast as they advanced. The amount of money changing hands on a daily basis has shrunk to $114 billion.

New World Development fell 1.6 percent to a one-month low and Hang Lung Properties Ltd. slid 1.8 percent in Hong Kong. Declines in the city’s home prices will be driven by the U.S. Federal Reserve increasing interest rates by 1.5 percentage points to 2 percentage points, and the “limited prospect of any loosening” measures by Hong Kong’s government in the near term, Goldman Sachs property analyst Justin Kwok wrote in a note Thursday.

Before it's here, it's on the Bloomberg Terminal.