he Hang Seng Index was little changed at 23,520.87 at the close in Hong Kong after erasing a 0.3 percent gain. About three shares fell for every two that rose on volume 16 percent lower than the 30-day intraday average. The Hang Seng China Enterprises Index, also known as the H-share index, lost 0.1 percent to 10,467.06. Data yesterday showed China’s gross domestic product growth accelerated for the first time in three quarters.
“We are lacking major catalysts,” said Jackson Wong, vice-president at Tanrich Securities Co. in Hong Kong. “China’s economic data have been slightly better, but that doesn’t warrant rolling out policies to support growth.”
The Hang Seng Index (HSI) advanced 0.9 percent this year, reversing losses as reports showed China’s economy is stabilizing after the government deployed targeted stimulus to prop up growth. The gauge traded at 11 times estimated earnings, compared with 7.3 for the H-share index and 16.7 for the Standard & Poor’s 500 Index.
Sands China, controlled by billionaire Sheldon Adelson, slid 1.2 percent. The company posted second-quarter net income that missed analysts’ estimates on lower spending by high-stakes players. Wynn Macau, a unit of billionaire Steve Wynn’s gaming company, dropped 2.5 percent, while MGM China Holdings fell 2 percent.
Bank of America analyst David Cui says state spending and monetary stimulus that drove a 14 percent rally in the H-share gauge from this year’s low in March are only making equities less appealing. He says unwillingness to endure slower growth needed to cut debt and shift the economy from exports will prevent a sustainable rally. The gauge will drop to 9,600 by year-end, or 8.4 percent below yesterday’s close, he predicted.
China’s banks may sell an estimated US$ 56.7 billion to US$ 64.8 billionin shares over the next few years to meet capital requirements, with the fundraising likely to weigh on existing equities, UBS AG strategist Chen Li said in Shanghai.
Futures on the S&P 500 fell 0.2 percent today. The underlying gauge gained 0.4 percent yesterday and the Dow Jones Industrial Average reached an all-time high as Intel Corp. rallied after its sales forecast topped analysts’ projections and Time Warner surged after rejecting a takeover bid. U.S. industrial production capped its strongest quarter in almost four years.
Federal Reserve Chair Janet Yellen said in testimony to lawmakers that asset valuations in general aren’t out of line with historical norms. A central bank report the day before indicated prices for smaller social-media and biotechnology companies are substantially stretched.