Hong Kong shares ended 0.67 percent lower on Friday, a pull back from the previous session's 13-month high on concern that gains were overextended, but accelerating optimism for an economic recovery limited the decline. Ample liquidity also gave hope for further gains, allowing local stocks to ignore a sharp decline in the mainland market, brokers said.
Banks and financial stocks remained in focus in Hong Kong with BOC Hong Kong down 7.11 percent at HK$17.24 after reaching a 13-month high in the previous session. ICBC lost 1.12 percent to HK$6.16. But index-heavy weighted HSBC extended its previous gain to edge up 0.27 percent to HK$91.20. The stock surged 4 percent to its year high on Thursday.
"Upside momentum is building again after today's consolidation, and riding on the US dollar's weakness," said Conita Hung, head of equity research at Delta Asia Financial. "Further upside can be expected when unfrozen funds from IPOs return to the market next week, adding to the already high market liquidity."
The benchmark Hang Seng Index retreated 145.06 points to 21,623.45, climbing more than 1,000 points in the last two sessions, and ending the week up 2.2 percent in the third consecutive weekly gain. The China Enterprises Index, which represents top locally listed mainland Chinese stocks, eased 0.42 percent to 12,614.57. Turnover dropped to HK$73.3 billion (US $9.5 billion) against HK$84.66 billion on Thursday.
Chinese developer Poly (Hong Kong) surged 17.2 percent to a more than two-year high of HK$9.15, its highest since July 2007, before ending at HK$9.02, still up 15.49 percent. Poly said China Investment Corporation would buy HK$409 million worth of its new shares and the company would buy HK$2.7 billion worth of assets from its parent.
Kingboard Laminates fell 1.45 percent to HK$5.45. The laminates maker said after the market closed that its major shareholder was selling 120 million shares at a discount at HK$4.92-HK$5.06 each, raising up to $78.3 million. Shun Tak Holdings fell 6.69 percent to HK$6.14 after the property-to-transport investor said it planned to issue convertible bonds to raise about HK$1.395 billion to fund new investment opportunities and as working capital.
Top Asian refinery Sinopec fell 1.01 percent to HK$6.85 after a company official said its Tianjin plant aimed to start up its new 200,000 barrel-per-day (bpd) refining facility around mid-December or later, a delay from earlier plans. China's key stock index fell more than 3 percent in late trade on Friday, led by steel counters, as a slew of upcoming new share issues sparked profit-taking.
Analysts said a huge number of new shares hitting the market had tilted the balance to an oversupply against demand, boding ill for the market's near-term trend. Regulators have mainly been talking up the market, but their strong push of so many new share issues into the market undermined official support for stock trading, analysts said. Companies raised a combined 133 billion yuan in July and August and analysts see 50 billion yuan in the pipeline in September.
The Shanghai Composite Index tumbled as much as 3.9 percent to 2,940.83 points before closing at 2,962.667, down 3.19 percent from Thursday's close and below the psychologically important 3,000-point level. It fell 0.9 percent this week, snapping gains in the previous two weeks. "The market is under the double pressure of heavy new supply and profit-taking," said Qian Qimin, deputy head of research at Shenyin and Wanguo Securities in Shanghai.
"It has the potential to fall further. Near-term support is at the half-year moving average" now at 2,835 points. The index crumpled by a fifth in August its second-worst monthly performance in 15 years - prompting a government pledge to support the market.
Losing Shanghai A shares overwhelmed gainers by 787 to 143, while turnover rose slightly to an active 181 billion yuan ($27 billion) from 178 billion yuan on Thursday. The steel sector was hit hard after local media reported that the United States might impose extra duties on Chinese-made steel tube, sparking fresh worries over a possible escalation of Sino-US trade disputes. Wuhan Steel closed down 5.77 percent, while industry leader Baoshan Iron and Steel dropped 4.19 percent.
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