Hong Kong Stocks Erase Advance as Property Companies Decline

  • Outlook for Fed rate increase worrying investors: analyst
  • China Overseas Land tumbles after chairman Hao resigns

Rex Shares' King: Be Cautious in Emerging Markets

Hong Kong stocks reversed the day’s gains to end in the red, dragged down by developers amid increasing concerns of higher borrowing costs.

The Hang Seng Index lost 0.2 percent, erasing an advance of as much as 0.8 percent. China Overseas Land & Investment Ltd. tumbled 3.3 percent, pushing a gauge of real estate companies to a four-month low. China Shenhua Energy Co. posted its biggest three-day retreat since August amid efforts to cool coal prices. Futures on the S&P 500 Index dropped 0.1 percent, swinging from an advance.

Hong Kong shares have fluctuated since Donald Trump won the U.S. election last week as traders tried to decipher the implications of his presidency. The odds that the Federal Reserve will raise interest rates this year have shot up to 94 percent, raising concern for property companies in Hong Kong. The city’s currency peg to the greenback means it has to follow U.S. monetary policy.

“Sentiment for the Hong Kong market isn’t good," said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities Ltd. "The outlook of a rate increase in the U.S. has put pressure on high-yield stocks, such as utilities shares and property plays."

The Hang Seng Index closed at 22,280.53, while the Hang Seng China Enterprises Index erased gains to finish 0.4 percent lower. The Shanghai Composite Index lost 0.1 percent for a second day of declines after entering a bull market. The Shenzhen Composite Index held near its highest level since January as a report said a trading link with Hong Kong will open next week. The yuan dropped to an eight-year low of 6.8729 against the greenback.

Property Pressure

The Hang Seng Properties Index fell 1.2 percent, after sliding the most since 2012 last week. China Overseas Land led the drop, with Citigroup Inc. saying that Chairman Hao Jianmin’s resignation is negative for the company’s share price. Sino Land Co. lost 2.4 percent. Hong Kong developers have been under added pressure since the government doubled a stamp duty for foreigners’ purchases of homes to 30 percent.

Imperial Pacific International Holdings Ltd., the operator of a casino in the U.S. territory of Saipan, slid 7 percent after saying it hadn’t received any investigation notice involving its Best Sunshine gaming operation. Bloomberg News reported Nov. 14 that the U.S. Treasury’s Financial Crimes Enforcement Network has taken notice of activities at Best Sunshine.

Tencent Holdings Ltd. rose 1.9 percent. The internet giant posted a 43 percent rise in third-quarter profit, according to results released after market close Wednesday. Net income climbed to 10.6 billion yuan ($1.5 billion) in the three months ended September, compared with the 10.7 billion yuan average of analysts’ estimates compiled by Bloomberg.

Shenzhen Link

On the mainland, global investors have sold a net 2.71 billion yuan of mainland shares under an existing link between Shanghai and Hong Kong in November, poised for the biggest monthly outflows in a year. The expanded connection with Shenzhen, China’s technology hub, is expected to begin imminently, with the two bourses planning to test-run the program on Saturday, though no start date has been announced.

Outflows from mainland equities this month accelerated as the yuan’s drop steepened. Trump’s shock victory last Wednesday spurred the biggest daily net sales since last July. While the Republican has pledged to brand China a currency manipulator and impose a 45 percent tariff on the nation’s exports, he plans also to boost spending to help the U.S. economy.

The ChiNext index of small-capitalization stocks in Shenzhen advanced to its highest close in three weeks. Lens Technology Co., among the equities with the heaviest weighting on the measure, gained 1.3 percent.

— With assistance by Shidong Zhang

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