Hong Kong stocks fell on Tuesday, taking their losses in August to 2.3 percent, as worries about flagging US economic growth pushed investors back to the sidelines and technical charts pointed to further weakness. The benchmark Hang Seng Index ended down 1 percent, closing slightly below a near-term technical support level that had limited losses in recent sessions.
The Shanghai Composite Index fell 0.5 percent, with global market weakness offsetting generally strong corporate earnings from Chinese companies. China's main share index failed to gain much traction for the month after bouncing sharply in July. Foxconn International led the Hong Kong market lower, slumping 7 percent after the beleagured contract cellphone maker slipped deeper into the red in the first half of the year as it fights rising costs, falling handset prices and wage pressures.
Foxconn is the Hang Seng's worst performer in 2010, losing 43 percent of its value compared with a 6 percent fall for the index. Turnover in Hong Kong has stayed stubbornly low in recent months with the average daily turnover in August about 6 percent lower than that seen year to date, suggesting investor confidence remains weak. The Hang Seng Index rose about 10 percent from early July to August 9, aided by Shanghai's rebound. It has fallen 6 percent since.
The index fell below key support at the 61.8 percent retracement of that upmove and risks a retest of the July low near 19,800, with any near-term upside likely to be capped by the 50-day moving average currently at 20,759.1. The Shanghai Composite Index fell 14 points to 2,638.8, erasing about a third of Monday's gains and rounding out a nearly flat performance for August.
It appears to be finding a firm floor around its 60-day moving average, now at 2,557 points, as the Chinese earnings season draws to a close. While interim results have been robust, analysts have questioned how earnings will hold up in a economic slowdown. China's 1,947 listed companies posted an average 41 percent increase in first-half net profit, although growth is likely to slow in the second half as the economy moderates, the Shanghai Securities News reported on Tuesday.
Banks, among the most active stocks, were all lower, with China Everbright down 1.9 percent and Minsheng Bank down 1.1 percent. Agricultural Bank of China, the morning's most actively traded stock, dipped 0.4 percent. Chinese airlines were among the biggest losers as investors pocketed profits from recent gains.
Comments
Comments are closed.