Hong Kong - Chinese stocks in Hong Kong headed for their steepest four-day loss in three months, led by financial and energy companies, amid concern a pick up in economic growth is faltering.
The Hang Seng China Enterprises Index fell 0.6%, while the Shanghai Composite added 0.2%. China Life Insurance slid to a two-month low in Hong Kong, pacing a drop for insurers.
New World Development led a slump for developers after Goldman Sachs Group downgraded Hong Kong property stocks, predicting a 20% drop in home prices. A private index of China’s services industry fell to 51.8 in April from 52.2 in March, Caixin Media and Markit Economics said on Thursday.
Caixin’s measure of manufacturing for April underscored pockets of weakness in the Chinese economy, while the government’s gauge missed estimates. The Hang Seng China benchmark, which entered a bull market in March, has fallen nearly 7% from an April 21 high.
“The market has been in a consolidation phase as its previous rally, which was based on a rebound in commodity prices and signs of economic stabilization, is starting to taper off,” said Audrey Goh, a strategist at Standard Chartered Plc in Singapore.
“We are also going into the summer months, when the market tends to be weaker. We will have to see how corporate earnings improve and economic data stabilizes before investors come back again.”
The Hang Seng China gauge fell to 8 645.34 at 09:28. The Shanghai benchmark rose to 2,977.84. The Hang Seng China AH Premium index of the price gap between dual-listed shares in China and Hong Kong climbed for a fourth day, its longest stretch of gains this year.
China Life retreated for a sixth day in Hong Kong, its longest streak of declines since August, while Ping An Insurance Group slumped 1.4%. Lower bond yields may erode investment income and force life insurers to set aside more reserves for long-term contracts, Bloomberg Intelligence analyst Steven Lam said on Wednesday.
Commodity trading
PetroChina fell to a two-week low and Cnooc dropped for fifth day, pacing a decline among energy producers in Hong Kong.
The fever that’s gripped Chinese commodity markets is easing. Speculators who traded $261bn futures in a single day last month have retreated as fast as they advanced. The amount of money changing hands on a daily basis has shrunk to $114bn.
New World Development fell 2.1% to a one-month low and Hang Lung Properties slid 1.6% in Hong Kong. Declines in the city’s home prices will be driven by the US Federal Reserve increasing interest rates by 1.5 percentage points to 2 percentage points, and the “limited prospect of any loosening” measures by Hong Kong’s government in the near term, Goldman Sachs property analyst Justin Kwok wrote in a note on Thursday.