Hong Kong Stocks Fall, Led By Li & Fung, ICBC, on U.S. Concerns

Hong Kong stocks fell, poised to end the year 13 percent from their record high in October, after U.S. reports fueled concern the world's biggest economy will slow. Li & Fung Ltd., a supplier to Wal-Mart Stores Inc., led declines.

Industrial & Commercial Bank of China Ltd. paced a drop among banks after Goldman, Sachs & Co. predicted financial firms would make more writedowns on subprime-linked securities losses.

"A slowdown in the U.S. is very likely to happen," said Renault Kam, who helps manage $6 billion of Asian securities at Atlantis Investment Management Ltd. in Hong Kong. "Exporters, especially those relying on the U.S., will be affected most."

The Hang Seng Index lost 385.71 points, or 1.4 percent, to 27,457.22 at 2:45 p.m. local time, adding to yesterday's 1 percent decline. The measure's two-month retreat from the record has pared gains for the year to 38 percent, still the best annual performance since 1999. Investors clamoring for access to China's economic growth have created the world's biggest oil company, phone company and bank on the city's exchange this year.

Thirty-seven stocks declined while six advanced. Hang Seng December futures dropped 1 percent to 27,516. The Hang Seng China Enterprises Index, which tracks 43 ``H shares'' of Chinese companies fell 1.7 percent to 16,064.59.

Li & Fung, which had 72 percent of its revenue from the U.S. last year, slid 85 cents, or 2.6 percent, to HK$31.85, its biggest decline since Dec. 17.

Foxconn International Holdings Ltd., the world's largest contract maker of mobile phones, lost 40 cents, or 2.3 percent, to HK$17.16. Foxconn generated 24 percent of its sales from the U.S. last year. The stock is the worst performing member of the Hang Seng this year, declining 33 percent after doubling in 2006.

U.S. Data

U.S. durable goods orders, or items made to last several years, rose 0.1 percent in November, compared with a forecast of 2 percent in a Bloomberg survey. Separate figures from the Labor Department showed jobless claims unexpectedly increased last week. That was the first time since August that claims climbed for two consecutive weeks.

ICBC, the world's biggest bank by market value, fell 12 cents, or 2.1 percent, to HK$5.56. China Construction Bank Corp., the second-biggest, dropped 18 cents, or 2.7 percent, to HK$6.55. HSBC Holdings Plc, which made a third of its revenue in North America last year, lost 70 cents, 0.5 percent, to HK$130.90.

HSBC, the first global bank to warn of losses from mortgages made to borrowers with patchy credit histories, has declined 8.2 percent this year, on course for its worst year since 2001.

Citigroup Inc., JPMorgan Chase & Co. and Merrill Lynch & Co. may write down an additional $34 billion in securities linked to the collapse of the subprime mortgage market, Goldman said in a report. Citigroup may also be forced to cut its dividend by 40 percent to preserve capital, according to the report.

Bank of East Asia

Bank of East Asia Ltd., Hong Kong's third-largest bank, advanced HK$1.10, or 2.1 percent, to HK$52.60, the best performer on the index today. Criteria CaixaCorp, the investment company of Spain's biggest savings bank, agreed to buy a 4.76 percent stake in the bank for 352 million euros ($511 million).

Investors are also locking in gains ahead of the year end, according to Atlantis' Kam. The Hang Seng Property Index, which tracks six of the city's biggest developers, fell for a second day, snapping a 9.3 percent, four-day rally. The gauge is the best performing of the four that make up the benchmark.

Hang Lung Properties Ltd., the second-best performing stock on the index, fell HK$1.20, or 3.4 percent, to HK$33.90, its first decline in six days and paring gains this year to 74 percent. Cheung Kong Holdings Ltd., controlled by billionaire Li Ka-Shing, lost HK$2.30, or 1.6 percent, to HK$139.20.

China Mobile

China Mobile Ltd., the world's biggest wireless operator by subscribers, fell HK$2.10, or 1.5 percent, to HK$136.50, extending its 2.3 percent decline yesterday on concern China's plans to lift competition in the industry will eat into profit.

China Mobile, which controls two-thirds of the nation's wireless subscribers, has doubled this year, giving the company a market value of $356 billion. The stock accounted for more than a third of the Hang Seng Index's gain this year.

PetroChina Co., which overtook Exxon Mobil Corp. as the world's biggest company by value when it sold shares in Shanghai in October, fell 30 cents, or 2.1 percent, to HK$13.74. Chinese investors are unable to buy shares overseas, including in Hong Kong, creating pent-up demand for stock in Shanghai and Shenzhen.

PetroChina's market value topped $1 trillion after the domestic shares began trading last month, eclipsing Exxon's $488 billion at the time. Since then, PetroChina's market value has slumped by almost $300 billion - equivalent to all of Royal Dutch Shell Plc.