Hong Kong stocks fell, dragging the benchmark index to its biggest drop on the first trading day of the Lunar New Year since 2008, as developers declined on signs China will act further to cool property prices.
China Resources Land Ltd (華潤置地), a state-controlled developer, slipped 2.1 percent. Hang Lung Properties Ltd (恒隆地產), a Hong Kong-based developer, slid 3.2 percent after the city’s home sales declined last month. Sands China Ltd (金沙中國), a unit of Sheldon Adelson’s Las Vegas Sands Corp, lost 2.4 percent after its parent reported sales that missed analysts’ forecasts.
The Hang Seng Index retreated 1.5 percent to close at 23,553.59 after the market resumed trading from the Lunar New Year holiday. That was the gauge’s worst performance on the first trading day of the Lunar New Year since 2008, when it fell 3.6 percent.
“This year it will be a volatile market because we have to watch out for mainland factors, such as inflation, money supply, and the property sector, which the Chinese government is still using a lot of tightening measures to control,” said Ronald Wan, managing director of China Merchants Securities Co (招商證券). “A correction may happen in the second quarter of this year because inflation in China is yet to reach its peak.”
The Hang Seng Index has gained 2.3 percent this year as US economic reports boost confidence in the strength of global growth, overshadowing concern that China will step up measures to combat inflation and tame property-price gains.
The US unemployment rate fell to 9 percent last month from 9.4 percent in December, the US Labor Department said.
Shares in the gauge trade at an average 12.7 times estimated earnings, compared with about 17.2 times at the start of last year.
China Resources Land, a state-controlled developer, dropped 2.1 percent to HK$13.98. China Overseas Land & Investment Ltd (中國海外發展有限公司), controlled by the nation’s construction ministry, slid 1.9 percent to HK$14.60.
Chinese Premier Wen Jiabao (溫家寶) said on Wednesday a drought in parts of China may cut grain output and undermine government efforts to stabilize prices.
Wen also pledged in his Lunar New Year speech on Feb. 1 to curb property speculation and add more affordable housing after home prices rose last month as buyers ignored government measures to deter them. The government last month raised down payments on second homes, and approved property tax trials in Shanghai and Chongqing.
Industrial & Commercial Bank of China Ltd (中國工商銀行), the nation’s biggest lender by market value, lost 1.7 percent to HK$5.78. China Construction Bank Corp (中國建設銀行), the No. 2, slid 1.6 percent to HK$6.79.
Hang Lung slid 3.2 percent to HK$33.45. Sino Land Co (信和置業), a Hong Kong developer controlled by billionaire Robert Ng (黃志祥), declined 2.8 percent to HK$14.88. Sun Hung Kai Properties Ltd (新鴻基地產), Hong Kong’s biggest developer by market value, fell 1.9 percent to HK$130.20.
Hong Kong’s home sales last month slumped 16.5 percent to HK$33.3 billion (US$4.3 billion) from December, the city’s Land Registry said.