BEIJING: Hong Kong fell, led by financial companies, as stronger-than-expected U.S. factory data boosted expectations the Federal Reserve will raise interest rates. The Shanghai gauge erased earlier gains after surging Monday.
Hong Kong’s Hang Seng China Enterprises Index declined 1.3 percent to 14,111.67 at 1:04 p.m. in Hong Kong after advancing 1.4 percent on Monday. Volatility has increased to a five-year high in Shanghai as record margin trading fueled the world’s biggest rally. The Shanghai gauge posted the steepest two-day retreat since 2009 last week after rising 143 percent in 12 months, only to rally the most since January on Monday.
“The market needs to consolidate a bit after yesterday’s jump to allow some investors to take short-term profits,” said Wu Kan, a money manager at Dragon Life Insurance Co. in Shanghai, which oversees about $3.3 billion. “The start of the IPO sales will cause disruption of liquidity, making the market more volatile.”
The Hang Seng Index slipped 0.8 percent. The Shanghai Composite Index slid 0.4 percent to 4,808.23 after changing directions five times. China National Nuclear Power Corp. and 22 other companies start marketing initial public offering shares Tuesday and Wednesday, potentially locking up 4.9 trillion yuan ($790 billion), according to the median estimate of six analysts surveyed by Bloomberg.
