Hong Kong Stocks Fall as Investors Wait for MSCI's Call on China

  • MSCI to announce China A-share decision Wednesday local time
  • Tesla said to near pact for vehicle manufacturing in China

MSCI Delays Argentina, Saudi Arabia EM Decisions

Hong Kong stocks declined, with banks among the biggest drags on the city’s benchmark.

The Hang Seng Index fell 0.3 percent to 25,843.04 at the close. Link REIT, which traded ex-dividend Tuesday, pulled the benchmark down the most. Banks accounted for three of gauge’s top eight biggest drags, with HSBC Holdings Plc weighing it down by about 15 points. Want Want China Holdings Ltd. fell 2.8 percent to lead declines. The Shanghai Composite Index fell 0.1 percent at the local close before MSCI Inc. announces whether it will add Chinese domestic shares to its benchmark indexes.

Hong Kong equities have outperformed mainland-traded peers this year, with the benchmark Hang Seng Index gaining 17 percent to rank among Asia’s top performers. Developers have led the year-to-date advance in Hong Kong, underpinned by the city’s surging home prices. The Shanghai benchmark has meanwhile eked out a 1.2 percent gain as a government deleveraging campaign weighed on shares.

"Investors are taking a cautious approach ahead of the MSCI decision on A shares and as Hong Kong stocks trade near the highest level in two years," said Linus Yip, a Hong Kong-based strategist with First Shanghai Securities.

MSCI will announce early Wednesday morning Hong Kong time whether China’s domestic stocks have won inclusion in its benchmark indexes. Previous efforts have foundered on concern over repatriation limits and excessive trading suspensions, obstacles the index compiler has sought to overcome with a less ambitious proposal.

In a signal China may allow foreign firms greater access to the local market, People’s Bank of China Governor Zhou Xiaochuan said China should forge ahead to further open the financial services industry. He spoke Tuesday at the Lujiazui Forum, an annual gathering in Shanghai. Zhou also said that the global economy is still facing uncertainties in spite of recovering momentum, and intensified financial reforms are needed in many countries.

  • Chinese developers with property in Shanghai’s Lingang development zone rallied after people familiar with the matter said Tesla Inc. was close to agreeing to build vehicles in the area. Shanghai Lingang Holdings Corp. jumped as much as 8.7%, while Shanghai Waigaoqiao Free Trade Zone Group Co. rose as much as 8%, the biggest intraday gain since August.
  • Lithium makers also rallied on the news. Investors are betting China will roll out supportive policies for the domestic electric car industry after the report on Tesla, said Wu Kan, a Shanghai-based fund manager with Shanshan Finance. Tianqi Lithium Industries Inc. soared 8.1% to a record high, while Jiangxi Ganfeng Lithium Co. rose 4.5%.
  • Macau casinos advanced after Deutsche Bank boosted its gaming revenue estimate for the gambling enclave. SJM Holdings Ltd. added 1.7%, while Galaxy Entertainment Group Ltd. climbed 1.6%.
  • Billionaire Li Ka-shing told associates that he plans to retire by next year as chairman of his flagship CK Hutchison Holdings Ltd., the Wall Street Journal reported, citing unidentified people familiar with the matter. Li hasn’t specified a date but is likely to step down by his 90th birthday in July next year, according to the story. CK Hutchison Holdings Ltd. retreated 0.2%, while Cheung Kong Property Holdings Ltd. climbed 0.7%. Volume for both stocks was less than the three-month full-day average.
  • Net buying of mainland stocks via the Shanghai and Shenzhen northbound links reached about 400 million yuan. That’s less than half the year-to-date daily average through Monday.
  • The ChiNext gauge of mostly technology shares advanced 0.3%, paring gains of as much as 1%.

— With assistance by Amanda Wang

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