Hong Kong Stocks Fall to Cap Biggest Monthly Loss Since February

(Bloomberg) -- Hong Kong's benchmark stock index fell to cap its worst monthly performance since February as AIA Group Ltd. tumbled amid concern Chinese curbs on the purchase of insurance products will hurt earnings and lower oil prices weighed on energy producers.

The Hang Seng Index fell 0.1 percent at the close, retreating for a fifth day to take its loss for the month to 1.6 percent. Mainland investors sold a net 729 million yuan ($108 million) of Hong Kong shares on Monday, the most since July 2015. AIA Group was the biggest decliner after China UnionPay Co. halted credit card payments for most insurance policies in Hong Kong. Cnooc Ltd. slumped as crude approached $48 a barrel. The Shanghai Composite Index trimmed a monthly advance.

Hong Kong stocks dropped in October as mainland flows into the city through an exchange link with Shanghai dried up and investors boosted bets on higher U.S. borrowing costs. Chinese developers were among the biggest losers as cities rolled out rules to cool property price gains. The declines are a sharp contrast to the previous three-month period, when the Hang Seng Index surged the most in seven years amid expectations the flood of Chinese cash would continue to buoy shares.

“The Hong Kong market is still under a correction mode," said Ben Kwong, a Hong Kong-based director at KGI Asia Ltd. “It's very reasonable since the third quarter was very good. Investors are looking for excuses to sell rather than to buy."

The Hang Seng Index closed at 22,934.54. The Shanghai Composite fell 0.1 percent, trimming its gain for the month to 3.2 percent.

New Rules

AIA Group slid 4.8 percent, the most since February. The new restrictions effectively disallow the purchase of almost all kinds of policies with UnionPay cards, including popular health policies that usually contain a savings component, China International Capital Corp. said in a report. About half of fiscal first-half sales by AIA's Hong Kong unit were generated from Chinese visitors, AIA Chief Executive Officer Mark Tucker said in July.

Cnooc lost 1.7 percent. Oil futures dropped as much as 1.1 percent in New York after sliding 2.1 percent at the end of last week. The Organization of Petroleum Exporting Countries ended a meeting on Friday without reaching a deal on country quotas, according to delegates who took part in the discussions. PetroChina Co. fell 0.7 percent after the company reported profit slumped 77 percent last quarter.

About three stocks gained for every two that fell on the Hang Seng Index on Monday. Cheung Kong Property Holdings Ltd. rallied 3.1 percent, the most since July, after the Hong Kong Economic Journal said the developer is set to sell a commercial building for HK$35.7 billion ($4.6 billion).

Bank of Communications rose 1.7 percent. The lender announced on Friday its third-quarter profit climbed to 14.9 billion yuan from 14.7 billion yuan a year earlier.

The Hang Seng China Enterprises Index advanced 0.5 percent to narrow its losses for the month to 0.2 percent. Dongfeng Motor Group Co. led gains on the H-share gauge, adding 3.7 percent, after Credit Suisse Group AG raised its rating to outperform, while HSBC Holdings Plc and Goldman Sachs Group Inc. increased their target price.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net. To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Philip Glamann