Hong Kong shares fell 0.3 percent on Tuesday as investors switched from benchmark stocks into small caps, but coal stocks advanced on fresh signs that China's demand for the resource would remain strong.
On Tuesday's government land auction failed to lift property shares as risks loomed that the city's interest rates could head higher amid a weak Hong Kong dollar and higher interbank rates.
With US markets closed for a public holiday on Monday and mainland stocks continuing their march to new highs, analysts said the market was lacking fresh catalysts. "There's no major theme at the moment," said Peter Pak, vice president at BOCI Securities. "In the near-term, I don't see huge downward pressure, but I'm cautious. It's still risky to get into the market.
Everyday is a new high in China it's worrying." The benchmark Hang Seng Index closed down 60.17 points at 20,469.59, having tapped its lowest level since May 2. Turnover was HK$54.0 billion (US $6.9 billion), slightly off on Monday's HK$54.5 billion.
The China Enterprises Index of H shares, or Hong Kong-listed shares in mainland companies, fell 28.21 points to end at 10,615.45. "There are no leads, so things tend to drift and drift lower," said Andrew Sullivan, director of sales trading at Daiwa Securities.
"There's no news to drive us to 21,000 but there's no news to push us down to 19,000." Among large-caps, coal shares were the standouts. China Coal shot up nearly 5 percent to HK$9.45 and China Sienna raced up 1.6 percent to HK$22.15 following reports that China for the first time became a net importer of coal in the first quarter, a sign that demand for the resource would remain robust.
Yanzhou Coal climbed 2.7 percent to HK$9.6. Mainland lenders extended their losses on concerns that China would further tighten credit. Industrial & Commercial Bank of China dropped 1 percent to HK$4.07.
Bank of Communications declined 0.8 percent to HK$8.23. Among property developers, Cheung Kong (Holdings) Ltd edged down 0.8 percent to HK$101.80, while Sino Land Co Ltd fell nearly 1 percent to HK$17. The day's most heavily traded small-cap was Nan Hai Corp Ltd, a property-to-technology investment holding company, which rose 5.5 percent to HK$0.385. Travel services provider Guo Xin Group Ltd, another heavily traded small cap, jumped nearly 13 percent to HK$0.44.
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