Hong Kong stocks slipped 1.13 percent Tuesday as China released more weak economic data and mainlanders snubbed opportunities to invest in the city via the new share trade link-up with Shanghai. The Hang Seng Index shed 267.91 points to 23,529.17 on turnover of HK$74.60 billion ($9.63 billion).
While US investors provided a positive lead Monday from Wall Street, their Hong Kong counterparts were jolted by data showing the average price of new homes in 70 Chinese cities fell in October for a sixth straight month. Increasing weakness in the property sector has been partly blamed for the slowdown in the world's number two economy and key driver of global growth.
The drop comes despite government measures to kick-start the economy. While the latest was not as big as September's, James MacDonald, head of research at property consultancy Savills China, warned prices had not yet bottomed. "It's difficult to see a pickup in prices in the next few months," he told Dow Jones Newswires, adding that house-hunting would likely drop off as winter approaches.
Mainlander interest in the city's shares was also virtually non-existent on the second day of the much-vaunted trading link up with Shanghai's exchange that lets dealers in each market buy shares in the other. But China-based investors bought just 7.6 percent of their daily allowance of Hong Kong shares by the end of the day Tuesday, while Hong Kong dealers picked up less than a third of their Shanghai quota.
On Monday, the day of the Connect launch, dealers in Hong Hong bought up their entire quota of mainland shares, but mainland dealers used up less than 20 percent. Hong Kong Exchanges and Clearing fell 2.36 percent to HK$173.9 after losing 4.45 percent Monday.
Among other firms Cathay Pacific Airways slipped 1.54 percent to HK$15.34, HSBC fell 0.45 percent to HK$77.20 and Tencent lost 2.56 percent to HK$125.80. In mainland China the benchmark Shanghai Composite Index fell 0.71 percent, or 17.64 points, to 2,456.37 on turnover of 174.7 billion yuan ($28.5 billion). The Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 0.18 percent, or 2.36 points, to 1,338.09 on turnover of 140.4 billion yuan.
"Investors took profits from stocks that gained before the launch of the Shanghai-Hong Kong Stock Connect," Haitong Securities analyst Zhang Qi told AFP. Also, 11 companies will start offering shares for subscription by investors next week, sparking worries about market liquidity. "There's always a correction before new share offerings," Zhang added. Financial plays fell in Shanghai. Bank of China eased 2.98 percent to 2.93 yuan, China Pacific Insurance Group dropped 2.87 percent to 19.96 yuan and Citic Securities slipped 2.74 percent to 14.55 yuan. Property developers were lower. Vanke eased 1.90 percent to 9.29 yuan in Shenzhen, while Poly Real Estate tumbled 2.69 percent to 5.78 yuan in Shanghai.
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