Hong Kong blue chips held steady on Thursday as investors found solace in mostly higher Asian markets, helping to offset morning losses triggered by overnight sell-offs in US and European equities.
Sinopec Corp was a big drag on blue chips as investors sold Asia's top oil refiner after a recent rally, but those losses were cancelled by CNOOC Ltd, which rose for a sixth-straight session, thanks to recent broker upgrades.
The debut by shoe retailer Walker Group, which raised US $74 million in a Hong Kong IPO, tracked expectations, despite the weak market. Investors stayed skittish amid fresh inflation and interest worries after Wednesday's US government report showed unit labour costs rose higher than expected. Hong Kong's interest rate cycle tends to track the US's, since its currency is pegged to the US dollar.
Moreover, not everyone was convinced that the day's strong recovery in mainland equities would be sustained amid talk of more interest rate increases by China's central bank. "Although the mainland market rebounded substantially, Hong Kong players remain cautious about China," said Kenny Tang, associate director at Tung Tai Securities.
Whether the Shanghai Composite Index can stay near the key 4,000 level remained a concern, Tang said. The benchmark Hang Seng Index ended near the day's high at 20,800.16, down 18.45 points. The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, fell 0.7 percent to 10,956.67.
Analysts said the market would stay its range-bound course as it has for the past few weeks, though some were cautiously optimistic. "It seems we're not confident enough to break out of range right now," said Alex Wong, director at Ample Finance. "But if I have to bet on the direction for breaking out of range, I would bet on the upside."
Mainboard turnover was HK$64 billion (US $8.2 billion) compared to Wednesday's HK$62.6 billion. Shoe retailer Walker Group settled at HK$4.51 to end nearly 17 percent higher than its IPO price of HK$3.86 per share, having earlier gained as much as 22 percent.
CNOOC Ltd leapt 2.6 percent to HK$8.28, with brokers saying the stock was also being helped by its lagging status - having underperformed its peers Sinopec and PetroChina Co Ltd following their major oil discoveries. Sinopec, the biggest drag on the H share index, fell 0.6 percent to HK$8.60. PetroChina slid 1 percent to HK$10.44.
New World Development gained 1.4 percent to HK$19.84, a day after a local paper said the company's department store chain could raise more than HK$2 billion through a separate listing, citing group chairman Cheng Yu-tung. China CITIC Bank raced up 1.5 percent to HK$5.97. The mainland lender said on Thursday that it aimed to more than triple its credit card issuance to 10 million by 2010, up from 3 million now.
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