HK Stocks Fall for First Time in Six-Days as HSBC Slumps

25-Feb-2015 Intellasia | Bloomberg | 6:00 AM Print This Post

Hong Kong stocks fell, with the Hang Seng Index headed for the first loss in six sessions as its biggest stock, HSBC Holdings Plc., dropped the most since August 2013 after reporting earnings slumped.

HSBC was the biggest contributor to declines on the Hang Seng after the London-based bank said pre-tax profit dropped by 56 percent. Energy shares retreated and airlines rose after crude slid below $50 a barrel, with Kunlun Energy Co. losing 1.4 percent and Air China Ltd jumping 4 percent. Casino stocks declined for a second day after local media reported the number of tourists from the mainland fell, sending Galaxy Entertainment Group Ltd 2 percent lower.

The Hang Seng slid 0.6 percent to 24,687.00 as of 10:33 a.m. in Hong Kong. The Hang Seng China Enterprises Index of mainland stocks traded in the city fell 0.3 percent to 12,001.03. Mainland exchanges will re-open tomorrow after being shut since February 18 for Lunar New Year holidays.

“Analyst have already reduced their expectation for HSBC and yet the company came in below expectations, so analysts will continue to cut,” said Daphne Roth, the head of Asian equity research at ABN Amro Private Banking which manages about $218 billion. “Chinese tourists are certainly travelling a lot more, but they’re going beyond just Hong Kong and the usual places. I see them increasingly going to countries such as Thailand.”

Heaviest Weighting

HSBC fell 3.5 percent to HK$69.45 after reporting pre-tax fourth-quarter profit of $1.7 billion, missing analyst estimates of $3.7 billion. The bank is the heaviest-weighted stock on the Hang Seng, accounting for about 12 percent of the measure. Shares in London trading slumped 4.6 percent.

Energy shares slumped after crude oil in New York dropped 2.7 percent on Monday. Kunlun Energy fell 1.4 to HK$7.61 while China Oilfield Services Ltd lost 2 to HK$11.96.

Air China gained 4 percent to HK$6.78 and China Southern Airlines Co. advanced 2.1 to HK$3.84.

Casino stocks fell as the number of tourists to Hong Kong from the mainland declined for the first time in 20 years, the South China Morning Post reported, citing the head of Hong Kong’s Travel Industry Council. Galaxy Entertainment slumped 2 percent to HK$41.20, while Wynn Macau Ltd fell 1.5 percent to HK$22.45.

Greek Reforms

Investors are also watching the situation in Greece after a February 20 agreement with creditors. The head of the group of euro-region finance ministers expects Greece to deliver a package of economic measures that will satisfy creditors and avert another emergency round of negotiations.

Under the draft agreement, the government had until midnight Greek time to complete a list of policies in return for continued funding. A draft list was sent to creditor institutions on Monday.

Investors will receive further clues on the Federal Reserve’s assessment of the US economy and the timing of an interest-rate increase when Chair Janet Yellen gives two days of testimony to Congress starting Tuesday. Federal fund futures traded on the CME Group Inc. exchange are signaling October as the most likely month the Fed will raise rates, according to Bloomberg data.

“The Fed is worried that low interest rates will lead to a rise in excessive risk taking, but besides stocks nothing else has been going up by a terribly large amount,” said Koichi Kurose, who oversees about 6 trillion yen ($51 billion) as Tokyo-based chief market strategist at Resona Bank Ltd “I think she’ll strike a fine line and refrain from saying anything particularly bullish or bearish for stocks.”

Futures on the Standard & Poor’s 500 Index were little changed after the underlying index fell less that 0.1 percent from a record in New York on Monday.


Category: Hong Kong

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