BLBG:Hong Kong Stocks Retreat, Led by Banks, Oil Producers, on Europe Concerns
Hong Kong stocks fell for the first time in four days as banks and oil producers retreated as concern mounted that Greece’s sovereign-debt crisis may be coming to a head, threatening to halt a global economic recovery.
HSBC Holdings Plc (HSBA), Europe’s largest bank by market value, slid 2 percent. Esprit Holdings Ltd. (330), the clothier that gets most of its revenue from Europe, tumbled 17 percent, extending its slump amid analyst downgrades after the company reported last week that full-year profit plunged 98 percent. Cnooc Ltd. (883), China’s biggest offshore oil producer by market value, declined 3.6 percent after crude prices dropped.
“The Greek situation could be coming to a head,” said Khiem Do, the Hong Kong-based head of multi asset strategy at Baring Asset Management, which oversees about $10 billion. “Some hair cut might be needed for Greece if it doesn’t receive additional funding. That could create a domino effect in countries like Spain, Italy and Portugal. That’s what the market is fearing.”
The Hang Seng Index dropped 2.1 percent to 19,047.15 as of the midday break in Hong Kong, extending last week’s 2.1 decline, amid signs Greece’s ability to avoid default hangs in the balance this week as international monitors get set to assess whether Prime Minister George Papandreou can meet the conditions of rescue loans. The Greek leader canceled a U.S. visit that was to begin yesterday, saying he needed to remain in the country for a “critical” seven days.
All but five stocks declined in the 46-member Hang Seng Index. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong declined 2.8 percent to 9,962.84.
Brink of Stagnation
Finance chiefs from the euro region said last week that the 18-month debt crisis leaves no room for tax cuts or extra spending to spur an economy on the brink of stagnation. Economic reports on Germany this week are forecast to show a decline in investor confidence and a slowdown in manufacturing in Europe’s largest economy.
HSBC Holdings slipped 2 percent to HK$63.30. Standard Chartered Plc (2888), the U.K.’s third-biggest lender by market value, dropped 1.5 percent to HK$166.60. Esprit Holdings tumbled 17 percent to HK$10.12, heading for its lowest close since February 2002.
Chinese lenders dropped on speculation the government will introduce measures to control inflation and further tighten monetary policy after a report showed new-home prices increased in all cities.
Critical Stage
Industrial & Commercial Bank of China (601398) Ltd., China’s largest lender, decreased 2.7 percent to HK$4.64. China Construction Bank Corp. (939), the second-biggest lender, slipped 2.8 percent to HK$5.52. Smaller rival Bank of China Ltd. (3988) dropped 2.4 percent top HK$2.85.
China’s measures to control its property market are at a critical stage and the nation needs to focus efforts on curbing price increases in less affluent cities after limiting home purchases by each family in metropolitan areas including Beijing and Shanghai, Premier Wen Jiabao said on Sept. 1.
Raw-material producers declined on speculation demand will weaken as global economic growth slows. Cnooc declined 3.6 percent to HK$13.36. Jiangxi Copper Co., China’s biggest producer of the metal, slumped 4.1 percent to HK$17.90.
Crude oil futures headed for a one-week low in New York, while copper for three-month delivery extended its decline for a second day in London.
Futures on the Hang Seng Index (HSI) decreased 1.5 percent to 19,045. The HSI Volatility Index advanced 6.3 percent to 35.93, indicating options traders expect a swing of 10.3 percent in the Hang Seng Index in the next 30 days.
To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
