Hong Kong stocks ended flat on Wednesday with blue chips such as ports-to-telecoms conglomerate Hutchison Whampoa rising while sector peers of several of China's upcoming IPOs such as COSCO Pacific lost ground. But traders said the market looked set for further gains with funds flowing into Hong Kong ahead of some of China's largest ever IPOs.
"This bull run hit a little stop but there's a lot of funding coming up for IPOs in the next weeks and there's a lot of European funding floating in," said Alfred Chan, chief dealer at Cheer Pearl Investment Ltd.
The blue chip Hang Seng Index ended 0.04 percent higher, or 6 points, at 13,873.07.
Volume was above recent averages with HK$15 billion (US $1.9 billion) worth of shares changing hands.
Investors had been sticking to the sidelines over the past few weeks awaiting the pricing of upcoming China IPOs including China's largest coal maker, China Shenhua Energy, and Bank of Communications, which will be the first Chinese bank to list outside of the mainland.
Shenhua Energy, which aims to raise US $3.6 billion, is due to start trade around June 15. Bank of Communications is due to list one week later.
Shares in firms related to the upcoming IPOs had a bumpy ride with funds seen leaving old shares ahead of the new listings.
China's largest container shipping firm, COSCO Pacific, was the top blue chip loser of the day, falling nearly 4 percent to HK$14.50 ahead of the listing of its parent firm next month and with freight prices showing signs of a downturn.
"It makes no sense to hold shares in two companies of the same group," said Andrew To sales director at Tai Fook Securities.
The shares were further hurt after HSBC said profits of the company's parent firm, which will be listed next month, are forecast to drop 18 percent to 3.54 billion yuan (US $427 million) in 2006.
China's largest listed coal miner Yanzhou Coal fell 1.61 percent to HK$6.10 as the listing of China Shenhua looms.
The shares were further hurt by news China had raised a resource tax on coal companies operating in several provinces to discourage mining of marginal veins.
Global casual wear retailer and best performing Hang Seng stock of 2004 Esprit Holdings fell 1.35 percent to HK$55 on investor worries a declining euro will dent future profits.
The euro tapped 7-month lows against the US dollar after France voted against ratification of a European Union constitution last weekend. Esprit makes the bulk of its revenues in Europe and is seen as one of the view "euro plays" among Hang Seng stocks.
Hutchison Whampoa Ltd was the top blue chip gainer of the day, rising 1.85 percent to HK$69 as investors eye improving prospects for the firm's heavy investment in third generation mobile services.
China's top mobile provider, China Mobile, climbed a further 1.05 percent to HK$28.75 after tapping its highest levels since late 2001 on Tuesday, after UBS lifted its 12-month target price on the firm by over 5 percent to HK$31.60.
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