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Hong Kong - Hong Kong shares fell the most in three weeks on speculation recent gains were excessive relative to earnings prospects. Chinese banks and Tencent led declines.
The Hang Seng Index slid 1.2% at 09:17. Industrial & Commercial Bank of China dropped for only the second time in 15 days, pacing losses for mainland lenders. Tencent, which has the highest weighting on the gauge, retreated for a second day from a record high.
A benchmark gauge of real estate companies in Hong Kong declined 1.4%. The Shanghai Composite Index closed 0.1% lower, with a measure of price swings dropping to the lowest level since 2014.
The Hang Seng Index and the so-called H-share gauge are among the world’s best performers this month as the approval of an exchange trading link with Shenzhen and bets that central banks will add to stimulus boosted demand for the city’s shares. Traders are waiting for Federal Reserve chair Janet Yellen’s speech on Friday for any signs the US monetary authority will turn more aggressive.
“Good news including the Shenzhen stock link has all been priced in and investors are holding back from buying ahead of Friday’s speech by Yellen,” said Ronald Wan, chief executive of Partners Capital International, a brokerage in Hong Kong.
ICBC, China’s largest lender, slid 2.2% after a momentum indicator rose to levels only seen during one period in the past five years, while China Construction Bank lost 1%. Both have erased their 2016 losses as they jumped at least 10% this month.
Tencent lost 1.5%, the biggest drag on the Hang Seng Index by points. Trading volumes in Hong Kong were 21% below their 30-day average for the time of day. The 50-member gauge trades at 11.9 times its reported earnings, near its highest valuation in five years.
China Overseas Land & Investment fell 1.7% after Hong Kong-based China Merchants Securities analyst John So downgraded his recommendation on the stock. China Vanke lost 1.2% after S&P Global Ratings lowered the outlook on the developer’s corporate ratings to negative from stable.
China Telecom rose 1% after reporting first-half profit that beat estimates. Biostime International, a provider of pediatric nutrition and baby-care products, slumped to a three-month low after saying regulatory uncertainty may hurt its performance in the second half.
PetroChina and Citic Securities slipped at least 0.8% before their earnings reports on Wednesday.
