Hong Kong Stocks Drop as U.S. Debt Limit Impasse Hurts Sentiment

Bloomberg, (07/10) -- Hong Kong stocks fell as the political impasse over the U.S. debt limit and government shutdown weighed on investor sentiment. Energy and materials companies led declines. The Hang Seng Index dropped 0.8 percent to 22,967.20 as of 9:34 a.m. in Hong Kong. The Hang Seng China Enterprises Index, also known as the H-share index, declined 1 percent. Mainland markets are shut until tomorrow. U.S. House of Representatives Speaker John Boehner said lawmakers won’t raise the debt ceiling without packaging it with other provisions. Futures on the Standard & Poor’s 500 Index fell 0.5 percent today. The gauge posted its second weekly decline last week as the first partial government shutdown in 17 years began. The budget impasse has raised concern that lawmakers will be unable to agree on increasing the $16.7 trillion debt limit. The Treasury Department has said measures to avoid exceeding the cap will be exhausted by Oct. 17. Data from payrolls to retail sales will be delayed as long as the shutdown continues, making it harder for the Federal Reserve to assess the economy as it considers when to start paring unprecedented monetary stimulus. Fed San Francisco President John Williams estimated a two-week government halt would shave 0.25 percentage point off fourth-quarter economic growth. The Hang Seng Index gained 2.1 percent this year through Oct. 4 on better-than-expected Chinese data and after the Federal Reserve unexpectedly refrained from cutting stimulus. Hong Kong’s benchmark equity gauge traded at 11.1 times estimated earnings as of Oct. 4, compared with 15.2 for the S&P 500.