Publications
Partners
Shanghai - Chinese stocks in Hong Kong headed for their first decline in seven days, led by a retreat by energy and financial companies, on concern the recent rally was excessive.
The Hang Seng China Enterprises Index fell 0.9% as of 1:14 p.m. in Hong Kong after a 6.5% advance over the previous six days that sent the gauge to a three-month high. China Petroleum & Chemical Corporation dropped the most in three weeks following a decline in crude futures.
The benchmark Hang Seng Index pulled back after a six-day advance that took its rebound from a February low to 19%.
Tuesday’s decline comes after valuations on the Hang Seng China gauge climbed to this year’s high, amid data suggesting the Chinese economy is stabilizing and speculation that policy makers will offer stimulus.
Gross domestic product expanded more than expected in the second quarter, with monthly aggregate financing and retail sales also beating expectations, according to data released on Friday.
"The market needs to digest some profit-taking pressure after the good run-up on stabilizing economic data," said Dai Ming, a fund manager at Hengsheng Asset Management in Shanghai.
"In the short term, the market still has the momentum to trend up as the government isn’t likely to let economic growth slow too sharply."
The Hang Seng China Enterprises Index, which was at 9 005.86, traded at 7.8 times its projected earnings for the current year Monday, compared with this year’s average of 7 times, according to data compiled by Bloomberg.
The Hang Seng Index fell 0.6% after coming within 1% of a bull market on Monday. The Shanghai Composite slipped 0.9%.
China Petroleum, also known as Sinopec, lost 2.6% and PetroChina Company retreated 2.2% as oil traded around $45 a barrel before US data forecast to show crude stockpiles fell for a ninth week.
Tsingtao Brewery Company, the nation’s biggest beer brewer, sank 2.7%. Anhui Conch Cement Company, the largest cement maker, slipped for a third day.
A gauge of consumer-staples companies, the best-performing industry group over the past three months, led the drop in mainland trading.
Kweichow Moutai Company, the nation’s biggest maker of baijiu liquor, lost 3.1% to pare this year’s advance to 41%. Wuliangye Yibin Company slumped 4.6%, while Luzhou Laojiao Company sank 4.2%.
