Hong Kong Stocks Fall for First Month in Three

August 31, 2010, 1:04 AM EDT

By Hanny Wan

Aug. 31 (Bloomberg) -- Hong Kong stocks fell, dragging the benchmark index to its first monthly drop in three, after Foxconn International Holdings Ltd.’s first-half loss widened and developers slid ahead of a government land auction.

Foxconn, the world’s biggest contract maker of mobile- phones, slumped 8.3 percent. Sun Hung Kai Properties Ltd., the city’s No. 1 developer by market value, declined 1.4 percent. PetroChina Co., Asia’s largest company by market value, retreated 1.4 percent after crude oil prices dropped.

The Hang Seng Index lost 1.1 percent to 20,513.05 at the 12:30 p.m. break, extending its drop this month to 2.5 percent.

“Globally there’s plenty of liquidity, however, confidence hasn’t come back yet,” said Danny Yan, Hong Kong-based portfolio manager at Taifook Asset Management, which oversees about $400 million. “We can be pretty certain that growth in the second half of the year is going to slow. As a result, all this capital sits there, not knowing what to do.”

Shares also declined as slower-than-estimated growth in personal incomes in the U.S. heightened concern the economic recovery there may slow. A U.S. government report showed income growth failed to keep up with the biggest increase in consumer spending since March.

Yan said he is “optimistic that the U.S. will in the next couple of months introduce policies to support the economy,” and that he is looking into opportunities to reduce cash and increase equity holdings.

Global Growth

Concern economic growth may slow in the U.S., Europe and China has dragged down the Hang Seng Index by 5.9 percent from a four-month high on Aug. 9. Shares on the measure trade at an average of 13.2 times estimated earnings.

The Hang Seng China Enterprises Index of so-called H shares of Chinese companies fell 1.2 percent to 11,398.69.

Foxconn plunged 8.3 percent to HK$5.10 after reporting its first-half loss widened to $142.6 million from $18.7 million as the company increased research spending to attract orders, and average selling prices declined.

Sun Hung Kai slid 1.4 percent to HK$109.20. Cheung Kong (Holdings) Ltd., the city’s No. 2 developer by market value, fell 0.2 percent to HK$98. Henderson Land Development Co., controlled by billionaire Lee Shau-kee, dropped 1.6 percent to HK$46.55.

Land Sale

PetroChina slid 1.4 percent to HK$8.44. Cnooc Ltd., China’s largest offshore energy explorer, fell 0.5 percent to HK$13.32.

Crude oil futures declined 0.6 percent yesterday to $74.70. The contract fell 1.1 percent in after-hours electronic trading in New York as of 12:32 p.m. Hong Kong time.

China Resources Land Ltd., a state-controlled property developer, slipped 2.5 percent to HK$14.76. BNP Paribas cut its recommendation on the stock to “hold” from “buy,” saying the company’s “debt-funded growth is unsustainable in the medium term.”

Thirty-four stocks fell among the Hang Seng Index’s 43 constituents. Futures on the gauge declined 1.3 percent to 20,407.

--Editors: John McCluskey, Malcolm Scott.

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