Hong Kong stocks drop

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Hong Kong - Hong Kong stocks dropped, with the city’s benchmark index poised for the lowest close since July, as casino companies tumbled on signs of a slowdown in Macau gambling revenue and property developers declined.

Galaxy Entertainment Group Ltd. and Sands China Ltd. plunged more than 7 percent to lead losses in Hong Kong.

Gambling sales growth in Macau slumped to 7 percent in January, the slowest pace since October 2012, according to official data.

Wynn Macau Ltd. lost 3.6 percent.

A gauge of property stocks in Hong Kong dropped for an eighth day as Cheung Kong Holdings Ltd., the developer controlled by billionaire Li Ka-shing, slid to its lowest level since September.

The Hang Seng Index fell 0.8 percent to 21,223.37 as of 3:43 p.m. in Hong Kong, with more than two stocks dropping for each that rose. China’s markets are closed for holidays until February 7.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong, known as the H-share index, lost 0.7 percent to 9,447.62.

“Macau’s revenue growth is much weaker than expected,” said Steven Leung, director of institutional sales at UOB-Kay Hian Holdings Ltd. in Hong Kong.

“If this is a one-off, it shouldn’t be too big a problem. Otherwise, there is a risk for the whole sector to be downgraded.”

Galaxy Entertainment jumped 129 percent last year, while Sands China surged 87 percent.

That compares with a 2.9 percent advance by the Hang Seng Index.

Casino revenue in Macau increased 19 percent to $45 billion last year, about seven times that of the Las Vegas Strip.

 

Real Estate

 

The Hang Seng Property Index fell 1.1 percent to head for its lowest close since September 2012. Barclays Plc, UBS AG and Bank of America Corp. are among strategists expecting a real-estate slump in the city.

“The uncertainty on property developers is still there,” said Linus Yip, a strategist at First Shanghai Securities Ltd.

“Hong Kong property developers are not in a good environment.”

About $3 trillion has been erased from global equities this year after losses that began with currencies in Turkey and Argentina spread to developed markets.

The pace of economic growth in China is among the biggest questions in developing nations and the largest risks for markets, said Bill Gross, who oversees the world’s biggest bond fund at Pacific Investment Management Co.

The Hang Seng China gauge has slumped 13 percent this year, the worst performance after Japan’s Nikkei 225 Stock Average among global benchmark indexes, according to data compiled by Bloomberg.

 

China ‘Bologna’

 

“I call China the mystery meat of emerging-market countries,” Gross said yesterday during an interview on Bloomberg Television’s “Market Makers” with Erik Schatzker and Stephanie Ruhle.

“Nobody knows what’s there and there’s a little bit of bologna, so we’re just going to have to wonder going forward through this year as to the potential problems in China and other emerging markets.”

China’s economy grew 7.7 percent in 2013, the same rate as in 2012.

Expansion is forecast to be 7.4 percent this year, the weakest pace since 1990, based on the median estimate in a Bloomberg News survey.

Chinese leaders, including President Xi Jinping, have signaled their willingness to sacrifice short-term growth to reduce the economy’s reliance on debt-fuelled infrastructure spending and tackle pollution.

The H-share measure has plunged 18 percent since its recent high on December 2, while the Hang Seng Index sank 11 percent from its December high to enter a correction.

Shares on the benchmark Hong Kong gauge trade at 9.4 times estimated earnings. - Bloomberg News



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