Hong Kong shares flitted in and out of negative territory before closing flat on Tuesday, as investors locked in gains on a four-session, 6.4 percent rally after oil prices rose, but shares in Lenovo slid after IBM sold a stake in the Chinese PC maker.
Turnover on the exchange was the third lowest this year, with investors expecting Wall Street to fall overnight after a raft of US companies, including American Express, Apple and Texas Instruments announced dismal earnings growth after the closing bell on Monday.
Shares in Lenovo slid more than 5 percent after US computer giant IBM sold a 1.3 percent stake in the company for around $77.3 million and J.P. Morgan downgraded the stock on slowing Chinese demand.
But shares in Semiconductor Manufacturing International Co (SMIC) jumped 11 percent on a news report that Datang Telecom group may buy a 20 percent stake in SMIC, the nation's biggest contract chip maker. The Hang Seng Index closed 5.42 points lower at 22,527.48 after vacillating between 22,690.74 and 22,393.14 earlier.
Mainboard turnover fell to HK$51.9 billion ($6.7 billion) from HK$69.6 billion on Monday. The China Enterprises Index of top locally listed Chinese firms fell 0.1 percent. CNOOC ended 0.7 percent higher but off its day's peak, after fears that a tropical storm could hit US offshore oil installations sent crude over $131 per barrel.
Esprit dragged the main index lower, falling 2.3 percent after the company's deputy chairman and group CFO, John Poon, resigned with effect from July 20, ahead of the company's results in August. Shares in the smaller of China's two mobile network operators China Unicom slid 2.3 percent after it reported a significant decline in CDMA subscriber additions in June.
The China Enterprises Index of top locally listed Chinese firms fell 0.12 percent. Higher oil prices ended a rally in airline stocks, with Air China giving up 3.4 percent and Cathay Pacific Airways dropping 3.2 percent. Aluminium Corp of China (Chalco), the country's largest producer of the metal, fell 3.3 percent after Goldman Sachs cut its rating on the stock to neutral from buy on Monday on expectations of another power tariff hike by Beijing.
On Monday, Chalco said it may lose 30,000 metric tonnes of output after it halted some capacity at two ventures in Shanxi province because of a power shortage. Cement stocks took a beating after Goldman Sachs cut Anhui Conch and rival China National Building Materials to sell from neutral on Monday, citing potential difficulties in passing on climbing coal and power prices. Anhui Conch slid 6 percent, adding to Monday's 6 percent decline. CNBM fell 4.4 percent.
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