Hong Kong stocks fell 0.7 percent on Wednesday, halting five straight sessions of record closes, as investors sold China Mobile after a string of fresh six-year peaks and more talk of a share placement.
China Mobile's slide subdued gains by PCCW Ltd and property developers, which extended their momentum following a rate cut by local lenders this week. The benchmark Hang Seng index fell 128.07 points to end at 18,811.24 on turnover of HK$49.0 billion (US $6.3 billion) compared to Tuesday's HK$51.7 billion.
"It's a mixture of healthy profit-taking and the US election results," said Andrew Clarke, trader at Societe Generale Securities. Democrats earlier won enough seats to take the US House of Representatives in the US mid-term elections held on Tuesday, seen as a negative for stocks as investors bet on a less business-friendly environment in Washington.
China Mobile led the market lower after sliding 2.8 percent to HK$65.20. Shares in the world's largest cellular operator were ripe for profit-taking following gains of nearly 8 percent since it drove the market to its latest all-time high for the first time more than a week ago.
"There's rotational sentiment between people taking profits in China Mobile and putting their money in properties," Clarke said. Properties have trailed the market but they got a shot in the arm this week when the local unit of global lender HSBC led a round of rate cuts by local banks.
Laggard-chasing has been the dominant theme recently, in a typical year-end manoeuvre to drive up underperformers. Sun Hung Kai Properties tiptoed past its May highs to touch nine-year peaks before settling up 0.4 percent at HK$91.7. Henderson Land jumped 1.3 percent to HK$46.9.
China Merchants Holdings (International) Co Ltd, also seen as a laggard, surged 5.8 percent to HK$23.75. China Merchants' shares got a boost after Merrill Lynch said in a research note that the port investors' stakes in some of the most important ports in the mainland had long-term asset appreciation potential of which the market was not taking enough notice.
PCCW Ltd, Hong Kong's main fixed-line carrier, soared nearly 7 percent to HK$5.12 amid reports that Spain's Telefonica would buy a stake in the firm. Telefonica holds 5 percent of Beijing-run China Netcom, whose parent is PCCW's second-largest shareholder with a 20 percent stake. Netcom rose 3.7 percent to HK$15.18.
Aluminium Corp of China Ltd (Chalco), which has trailed the broad market, shot up 5.2 percent to HK$5.71 in heavy trade. Investors believed the worst was over for the world's number-two alumina producer, which reduced spot prices of its main product by nearly 19 percent last week.