Hong Kong blue chips climbed 0.3 percent and China plays gained 0.5 percent on Wednesday, as a rally in mainland-listed stocks prompted investors to buy China Life and other large-cap Chinese benchmark stocks.
But several heavily traded shares tumbled, among them Sinopec Yizheng Chemical Fibre Co Ltd, which halted a rally after parent Sinopec Corp denied speculation it would privatise its subsidiary soon. Casino operator Melco International Development Ltd struck a 14-month low after Melco PBL Entertainment (Macau) Ltd, its joint venture with Australia's Publishing and Broadcasting Ltd, reported a first-quarter net loss of US $27.2 million.
The benchmark Hang Seng Index closed up 69.11 points at 20,937.26 on turnover of HK$57.3 billion (US $7.3 billion), well off Tuesday's near-record HK$77.1 billion.
The China Enterprises index of mainland H shares gained 56.52 points to end at a record close of 10,949.57. "If you look at the volume, I think we're in a bit of consolidation," said Tat Auyeung, fund manager at Apex Capital Management. But H shares could have further upside in the near-term, he said. They held above 11,100 points briefly on Tuesday following a rally spurred by China's landmark decision to let banks invest in overseas stocks for the first time.
"If we continue to trade or consolidate at these levels, we can break above 11,000 in the near term," Auyeung said. Sinopec's two subsidiaries, Yizheng Chemical and Sinopec Shanghai Petrochemical Co Ltd both sank after a top Sinopec executive waved off market speculation that it was planning to buy out its Hong Kong-listed units soon.
Yizheng Chemical tanked 13.7 percent to HK$4.10, following days of heavy trading that pushed the stock to near-decade highs. Shanghai Petrochemical dropped 2.1 percent to HK$5.51. Sinopec gained 1.6 percent to HK$8.13. Melco ended the day at HK$13.02, down 3.8 percent. Melco PBL Entertainment quarterly results added to the recent pressure on the stock amid a further delay in the full opening of Crown Macau. Morgan Stanley said in a report dated March 16 that it cut its 2007 earnings estimates for Melco while putting a HK$15 price target for the stock.
China Life, the day's most active stock, climbed 1 percent to HK$26.30. PetroChina Co Ltd edged up 0.8 percent to HK$10.14 after its president said the recovery rate at newly discovered Jidong oil field could be over 40 percent, eclipsing earlier news that Fidelity Investments, the world's No 1 mutual fund company, had cut its holding of PetroChina American Depository Receipts (ADRs) by 91 percent in the first quarter of 2007.