Hong Kong blue chips ended a three-day record-setting streak on Thursday, falling 0.7 percent as steep declines on the Shanghai bourse prompted investors to book profits in China Mobile and other recent gainers.
Hong Kong-listed shares in mainland companies, or H shares, slid 1.5 percent as China Life tracked its Shanghai-listed A shares lower and PICC Property and Casualty Co Ltd fell after hefty gains this week.
"A shares' weakness led to a change in sentiment," said Alex Wong, asset management director at Ample Finance Group. "We have seen the top which may hold for a while - the Dow reached a new high but the Asian market failed to follow.
"Although we may find support at 20,500, I tend to think we'll correct further." The benchmark Hang Seng Index closed down 151.22 points at 20,669.83 on turnover of HK$51.8 billion (US $6.6 billion), compared to Wednesday's HK$58.5 billion.
"The market's been overbought in the last few days," said Andy Lam, associate director at Harris Fraser (International) Ltd. "Earnings are not giving upside surprises in the US, so I think the market is poised for a correction - maybe 10 percent - in the near-term, in the coming six weeks. I sense the big players are positioning some short-selling." The China Enterprises index of H shares fell 148.26 points to 9,864.31, following a plunge in Shanghai-traded shares amid warnings by China against the use of bank loans in the country's stock market and higher-than-expected inflation data.
China Mobile slid 1.7 percent to HK$76.15 after Wednesday's rally, breaking a six-session gaining streak. China Life, the biggest drag on the H shares and the day's most active stock, dropped 2.9 percent to HK$23.15. PICC tanked 7.9 percent to HK$4.78 after gaining 27 percent in the last three days.
Ping An Insurance (Group) Co of China Ltd dropped 1.2 percent to HK$38.50. Merrill Lynch cut PICC's stock rating to sell, citing valuation concerns and continuing pressure on premium pricing.
Investors also took profit in port builder China Communications Construction Co Ltd, which slid 3.8 percent to HK$9.06 in heavy trade. Coal plays, which had racked up hefty gains lately amid higher coal prices, also declined. China Shenhua Energy Co Ltd slumped 1.7 percent to HK$19.54 and China Coal tumbled 4.5 percent to HK$6.21.
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