Hong Kong Stocks Sink Most in Asia as Developers Drop With Yuanby and
Hong Kong stocks dropped, leading regional declines, as concern about property curbs and the interest-rate outlook weighed on real estate companies and the yuan weakened to a six-year low.
The Hang Seng Index retreated 1.3 percent after earlier climbing to a one-month high. China Resources Land Ltd. fell for a record ninth day, while New World Development Co. slid the most in a month. Cheung Kong Infrastructure Holdings Ltd., which earns almost of a third of its revenue from the U.K., slid the most since June as the pound extended its rout. The yuan fell 0.2 percent.
China’s financial regulators were said to plan further tightening controls on funds flowing into property after Shanghai joined a growing list of cities to impose new curbs. Investors have boosted expectations for a Federal Reserve interest-rate increase this year, which would weigh on Hong Kong home sales due to a currency peg with the greenback. The Hang Seng Index was the best performer in the third quarter among Asian equity benchmarks tracked by Bloomberg.
“One of the factors affecting Hong Kong is the interest-rate hike expectation,” said Ben Kwong, a Hong Kong-based director at KGI Asia Ltd. “Also the decline of the pound is also affecting companies with exposure to Britain. All these added together are negatively affecting the market sentiment.”
The Hang Seng Index dropped to 23,549.52 at the close, while the Hang Seng China Enterprises Index fell 1.2 percent. The Shanghai Composite Index rose 0.6 percent to a one-month high.
China Resources Land Ltd. slumped 3.9 percent, and China Overseas Land & Investment Ltd. dropped 4.2 percent to its lowest close since June 29.
Chinese authorities aim to tighten control on speculative real estate investments and money involved in land transactions, according to people familiar with the matter. Policy makers in cities such as Nanjing, Shenzhen and Fuzhou have announced measures to contain house-price bubbles, including restrictions on mortgage and down-payment policies.
The curbs came after Deutsche Bank AG warned last month that China’s housing market is in a bubble, while Goldman Sachs Group AG has said it sees growing risks across the real estate industry.
New World Development Co. lost 2.8 percent and Hang Lung Properties Ltd. slumped 2.9 percent, pacing Hong Kong property companies lower.
Odds that the Federal Reserve will raise borrowing costs by the end of 2016 have increased to about 68 percent from 41 percent two months ago amid signs an improvement in the U.S. labor market and economic data will support higher rates.
Bank of East Asia Ltd. retreated 3.8 percent after the stock was downgraded to reduce from hold at HSBC Holdings Plc.
Galaxy Entertainment Group Ltd. added 2.6 percent after Chinese visitors to Macau increased almost 7 percent during last week’s holidays, attracted by two new casino resorts. Sands China Ltd. advanced 1.2 percent.