Hong Kong blue chips fell one percent on Friday, tracking weaker Shanghai-listed stocks, as the prospect of further monetary tightening by China sent most stocks lower, with commodity plays especially hard hit.
Hong Kong property developers underperformed as rate cut hopes dimmed after the latest US economic data suggested the US Federal Reserve was likely to hold rates steady in the near-term. The benchmark Hang Seng Index had fallen 213.98 points to 20,780.63 by lunch on turnover of HK$31.4 billion (US $4.0 billion), compared with Thursday HK$34 billion.
The China Enterprises Index of mainland H shares fell 1.6 percent. "This is a normal correction," said Patrick Shum, strategist at Karl Thomson Securities. "The market could have a bounce-back in the afternoon and close near the 21,000 level. People might want to buy stocks at current levels." Commodity stocks were among the worst performing large-caps, with Jiangxi Copper Co Ltd tanking 3.4 percent to HK$12.46 in heavy trade. Aluminium Corp of China slid 3.5 percent to HK$10.38. Hong Kong property developers were also hard hit, with the Hang Seng property sub-index was declining 1.8 percent.
Cheung Kong (Holdings) Ltd dropped 2 percent to HK$105.8 and Hang Lung Properties shed 2.3 percent to HK$23.55. Mainland financial stocks also underperformed, with the index of Hong Kong-listed mainland insurers and lenders dropping 1.5 percent.
Shares in China Life, the most active, were off nearly 2 percent at HK$25.65.Bank of China fell 1.5 percent to HK$3.97 and China Construction Bank declined 1.6 percent to HK$4.81. Shares in Chinese textile maker Pacific Textiles Holdings Ltd had a disappointing reception in their first trading day, ending the at HK$5.16, 3.6 percent lower than their IPO price of HK$5.35.