Special Report: The mainland’s colonization of the Hong Kong economy

31 Dec 2014 | Author: | No comments yet »

Hong Kong Stocks Trail Global Equities for Second Straight Year.

HONG KONG (MarketWatch) — Hong Kong stocks ended the year with a modestly winning session Wednesday, after HSBC revised its Chinese manufacturing activity index for December slightly higher from an earlier reading. HONG KONG (AP) — Authorities in Hong Kong began destroying 15,000 chickens at a poultry market Wednesday and suspended imports from mainland China after some birds were found to be infected with bird flu.

The Hong Kong health secretary announced early Wednesday that the Cheung Sha Wan market will be closed for 21 days and imports suspended for the same period. The gauge’s advance this year compares with a 50 percent surge for stocks in mainland China through yesterday and a 2.7 percent rally on the MSCI All-Country World Index. The secretary, Ko Wing-man, said the H7 variety of flu was found in some chickens at the market supplied by a farm in Guangdong province on the mainland.

Kunlun Energy Co. and Cnooc Ltd. tumbled amid a rout in oil prices, while Sands China Ltd. and Galaxy Entertainment Group Ltd. sank more than 37 percent as a Chinese government crackdown on corruption curbed Macau gaming revenue. Hong Kong struggled to attract investors amid a U.S. bull market that’s sent the Standard & Poor’s 500 Index to 53 record closing levels this year and as monetary easing bolstered Japanese shares, according to VC Brokerage Ltd. Chinese state-owned railway giants China CNR Corp. 6199, +45.17% and CSR Corp. 1766, +32.32% soared 45% and 32%, respectively, after the companies announced a merger plan pushed by the central government. For Ample Capital Ltd., the Shanghai Composite Index’s rally is diverting funds and the earnings outlook for Hong Kong’s biggest companies is waning. “There are no new funds coming into Hong Kong, while local fund managers have to play the China rally,” said Alex Wong, Hong Kong-based asset-management director at Ample Capital, which oversees about $150 million. “Hong Kong blue chips lag the growth story.” The Hang Seng Index fell 9.1 percent from the start of 2014 through the year’s low on March 20, before rebounding 20 percent to a six-year high in September. Japan’s Topix index (TPX) yesterday capped a 8.1 percent annual advance, while the S&P 500 is set to gain 13 percent in 2014. “Hong Kong has been a laggard this year, with quite a bit of liquidity being absorbed by the U.S. market as well as Japan,” said Louis Tse, a Hong Kong-based director at VC Brokerage.

Mainland investors have used up just 4.2 percent of a 250 billion yuan ($40.3 billion) quota to buy Hong Kong equities through the exchange link with Shanghai that started in November, according to data compiled by Bloomberg.

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