Hong Kong stocks ended down 0.27 percent on Tuesday as investors were on edge after comments from US Federal Reserve chairman Ben Bernanke suggested that interest rates could rise further.
But mainland financial issues were immune to the rate jitters, as banks and insurers including China Life Insurance Co Ltd (China) helped the China Enterprises index of H-shares rise 0.52 percent.
The benchmark Hang Seng index ended down 43.12 points at 15,973.11, narrowing earlier losses. The China Enterprises index of H-shares, or Hong Kong-listed shares in mainland companies, closed at 6,737.12.
"The buying on the Chinese shares seems strong," said Y.K. Chan, strategist at Phillip Securities. "There has been heavy interest in the financial sector after Bank of China's listing."
Ping An Insurance (Group) Co of China Ltd, China's second-largest life insurer, climbed 2.7 percent to HK$22.50 and Bank of Communications Co Ltd gained 2 percent to HK$5.10. China Life Insurance, the country's largest life underwriter, rose 2.5 percent to HK$12.50.
"The Chinese financial sector has done well; it is least sensitive to US interest rate rise," said Louie Shum, managing director at Sincere Securities.
Bank of China edged up 0.7 percent to HK$3.575, in its fourth straight day of gains since listing last Thursday.
Mini-motor maker Johnson Electric Holdings Ltd was the top blue chip gainer, jumping 4.7 percent to HK$5.60 despite posting a 43 percent drop in its second-half profit on Monday. Some analysts said Johnson Electric's earnings met expectations and its prospects for the year ahead looked brighter.
"The company expects the current year performance to improve as copper prices turn flat, boosting gross margin," said Andrew To, sales director at Tai Fook Securities.
China Unicom Ltd rose 2.2 percent to HK$6.95 after UBS upgraded the stock's rating to "buy" from "neutral" on improving fundamentals and potential acquisition opportunities.
A Financial Times report that South Korea's top mobile carrier SK Telecom Co is planning to buy a 10 percent stake in China's second-largest mobile carrier also spurred speculation in the stock.
Rate-sensitive property shares sank, with Sino Land Co Ltd ending the day down 2.5 percent at HK$11.65. New World Development slid 2.5 percent to HK$11.90.
Because Hong Kong's currency is pegged to the US dollar, its interest rates tend to track the US rate cycle. Turnover was HK$29.8 billion (US $3.8 billion) compared to Monday's HK$31.6 billion.
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