Hong Kong blue chips fell 0.5 percent on Thursday as worries that China's record-breaking A-share markets could take big hits prompted investors to sell heavyweights like HSBC Holdings Plc.
But transport stocks got a lift from declining crude prices. An all-time high in the Baltic Dry Index - an indicator for commodity-freight rates - sent China COSCO Holdings Co Ltd to a record high and other shipping to multi-year highs. Mainland airlines took off after Singapore Airlines said it was talking to China Eastern Airlines Corp about possible cooperation.
The benchmark Hang Seng Index closed down 98.51 points at 20,746.27 on turnover of HK$60.5 billion (US $7.8 billion) compared with Wednesday's HK$56.8 billion. "People are cautious about A shares and US stocks," said Alex Wong, director at Ample Finance Group. "Their momentum seems to be weakening so a correction could be imminent."
The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, gained 0.5 percent to 10,566.67. Recovering freight rates pushed up shipping plays, with China COSCO, the listed flagship of the country's premier shipping conglomerate, surging as much as 11 percent to a record high before ending the day up 9 percent at HK$8.98.
Traders said the prospect of an asset injection by China COSCO's parent was also in play. Also in active trade was China Shipping Container Lines (CSCL), a subsidiary of state-owned China Shipping (Group) Company, which gained 3.5 percent to HK$4.11, having earlier tapped all-time highs.
COSCO International Holdings Ltd, which has a ship trading subsidiary, climbed 14.4 percent to HK$5.63, earlier tapping 9-1/2-year highs. China Eastern Airlines Corp soared 13.5 percent to end at HK$3.19, off a near-decade high, after Singapore Airlines said the two companies were in talks about a cooperation. The news, along with lower fuel prices, pulled up other airlines, including Air China which climbed 3.4 percent to HK$5.84 in heavy trade.
Shares in Shenzhen International Holdings Ltd, a vehicle of the Shenzhen government, leapt 9.7 percent to HK$0.68 in heavy trade on speculation of asset injections, including toll road projects, by the municipal government, traders said. Sinopec Yizheng Chemical Fibre Co Ltd, a listed unit of oil refiner Sinopec Corp, vaulted 19.2 percent to HK$3.67, as it sought to catch up to its A-share counterpart, which had risen by its daily limit.
Hong Kong Exchanges and Clearing Ltd advanced 1.2 percent to HK$80.55, a day after it surprised with a near-doubling in first-quarter earnings, which was followed by a spate of earnings upgrades. HSBC edged down 0.5 percent to HK$146. Among H-share gainers, Ping An Insurance, widely expected to join the benchmark Hang Seng Index, raced up 2.4 percent to HK$45.75 ahead of a quarterly index review on Friday.