Hong Kong stocks slumped Wednesday, dragging down the Hang Seng Index (HSI) by the most in almost a month, as Vodafone Group Plc sold its stake in China Mobile Ltd and developers dropped on speculation China will introduce new property-market curbs.
China Mobile, the world’s largest phone carrier by market value, declined 3.8 percent. China Resources Land Ltd, a State-controlled developer, retreated 1.4 percent. Bank of Communications Co (BoCom), part-owned by HSBC Holdings Plc, slipped 2 percent, on concern China will require lenders to increase loan loss reserves.
The HSI slid 1.5 percent to close at 21,088.86, the biggest decline since August 10. The Hang Seng China Enterprises Index of mainland-based Chinese companies listed in Hong Kong slipped 1.5 percent to 11,776.72.
“The market hasn’t done enough consolidation,” said Castor Pang, Hong Kong-based research director at Cinda International Holdings Ltd. “The upside of banks’ outlook is capped. What I fear is that increasing loan loss reserves could potentially increase provisions. There might be surprises in the banks’ full-year earnings.”
Shares in the Hang Seng Index trade at an average 13.7 times estimated profit, the highest level since August 13. The gauge has gained 11 percent from its May 25 low for the year amid optimism the US economy will avoid falling back into a recession and that Beijing will ease monetary policy to spur growth.
China Mobile slid 3.8 percent to HK$78.90. Vodafone sold its 3.2 percent, $6.55 billion stake in China’s largest mobile phone company Wednesday.
BoCom dropped 2 percent to HK$8.30. Bank of China Ltd, the nation’s fourth-largest bank by market value, fell 1.5 percent to HK$4.01.
Reports that China’s banking regulator will require banks to increase loan loss reserves will be negative for the nation’s mid-sized banks, Morgan Stanley said in a research report Wednesday.Indore Stock
China’s banking regulator is drafting a plan requiring banks to maintain loan-loss reserves equivalent to 2.5 percent of total lending, Guosen Securities Co said in a note to clients Tuesday, citing an unidentified China Banking Regulatory Commission (CBRC) official.
Separately, the country’s banking system has weak risk management and is exposed to potential systemic risks that can’t be ignored, Liu Mingkang, chairman of the CBRC, said in a statement on its website.
China Resources Land dropped 1.4 percent to HK$15.80. China Overseas Land & Investment Ltd, controlled by the nation’s construction ministry, fell 1.6 percent to HK$17.12.
The Central Government may introduce another round of measures to curb the property market, the 21st Century Business Herald reported, citing an unidentified person close to the Ministry of Housing and Urban-Rural Development.Chennai Investment
Dongfeng Motor Group Co gained 2.4 percent to HK$13.70, the biggest advance on the H-share index. Nissan Motor Co and its Chinese partner will jointly produce and sell cars under the new brand Qi Chen from early 2012, said Hideki Kimata, senior general manager of the companies’ joint venture unit.
All but four stocks dropped among the HSI’s 45 constituents. Futures on the gauge declined 1.6 percent to 21,031.
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