Hong Kong's top share index fell 0.48 percent on Wednesday after rising for four consecutive sessions, with property stocks succumbing to profit-taking after recent gains on a robust sector outlook.
The benchmark Hang Seng Index, which groups 33 leading stocks, fell 63.66 points to 13,084.40. Volume stood at just HK$10.32 billion, the second lowest so far this month.
"Investors are unsure about the market at the moment, particularly after Morgan Stanley put out a note saying it estimates a level just above 13,300 points a year from now," said Cheer Pearl chief dealer Alfred Chan.
Morgan Stanley analysts Rob Hart and Angus Chan said in a research note that they believe significant upside going forward for the Hang Seng is unlikely given a spate of industry and major stock downgrades.
Property investment firm Wheelock and its unit Wharf Holdings, both top gainers in previous sessions, fell 0.84 percent and 1.1 percent to HK$11.85 and HK$26.95, respectively.
But UBS advised investors to stay put, saying the property sector was just at the beginning of an upturn that was likely to last for a number of years.
UBS analysts Paul Louie and Franklin Lam said investors should hold on to their stocks as property prices should rise further in the remainder of 2004 on an improving local economy, a low interest rate environment and continued economic stimulus measures from China.
Hang Lung Properties, garment seller Li & Fung and Bank of East Asia were the only three blue-chip advancers.
Global fashion retailer Esprit Holdings fell 0.79 percent to HK$37.80 before it posted a forecast-beating 55 percent rise in full-year profit after the market close, thanks to stronger European sales and a surging euro. The stock hit an all-time high of HK$40.20 on Monday after having jumped by nearly 50 percent so far this year.
Shun Tak Holdings, controlled by Macau casino mogul Stanley Ho, fell 6.67 percent to HK$4.20 despite posting a nearly 90 percent jump in first-half profits to HK$227 million and beating a consensus forecast.
The stock had risen 55 percent so far this year through Tuesday's close, outperforming a 4.54 percent gain for the benchmark Hang Seng Index.
Analysts said a subdued performance on Wall Street also deflated Hong Kong stocks. US stocks ended barely higher overnight as oil prices rose.