Hong Kong shares ended Tuesday's volatile session 1 percent lower with steep losses by index heavyweight China Mobile turning the market sentiment negative and dragging the main index off early highs. Asia's largest wireless carrier China Mobile, tumbled 4.6 percent, posting its sharpest fall in two and a half months after falling below HK$100 for the first time in nearly a year on Monday.
Investors fretted about the company's earnings growth amid slowing economic growth in China and regulatory uncertainties, as Citigroup & UBS cut their earnings estimates and target price on the stock. "This is the culmination of all negative sentiment for China Mobile," said Benjamin Collet, head of hedge fund sales at Daiwa SMBC.
China Mobile, the second most heavily weighted stock on the main index, more than doubled its share price last year and was one of the main drivers of the sharp rally on the main index. The stock has fallen 31 percent so far this year, exceeding the 22 percent decline on the HSI.
Cellphone maker Foxconn International Holdings rose more than 13.4 percent in its biggest jump in six and a half months, adding to Monday's 9.5 percent rise. The rally followed a Merrill Lynch upgrade of the stock to neutral from underperform on an anticipated recovery in margins.
The Hang Seng Index closed 218.45 points lower at 21,640.89 after rallying to 22,309.33 earlier thanks to lower-than-expected consumer price inflation data from China. Mainboard turnover rose to HK$70 billion ($9 billion) from HK$57.6 billion on Monday. Shares in Li & Fung jumped 4.5 percent ahead of its first-half earnings announcement, due on Wednesday.
The company, which supplies consumer products to the likes of Wal-Mart Inc, was tracking a sharp rally in US retail stocks on hopes that lower fuel prices will boost consumer spending. Lower oil prices also sent shares in Cathay Pacific soaring 7.4 percent. The airline is expected to cut flights on some routes in a bid to control surging fuel bills. Cathay's parent Swire Pacific rose 2.8 percent.
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