Hong Kong blue chips slipped on Friday after four straight days of sharp rises, but posted their best weekly gain since October 1998 thanks to a landmark move by China to allow residents to invest directly in Hong Kong stocks.
But Hong Kong-listed shares in mainland companies, or H shares, rose 0.7 percent as investors bought insurers on extended optimism over China's latest investment programme. H shares rose nearly 20 percent for the week, their largest since September 1998.
Blue chips slipped 0.2 percent as investors dumped Bank of China on greater-than-expected US subprime exposure and cashed in recent gainers after four straight days of sharp rises. The mainland bank's Hong Kong unit, BoC (Hong Kong), also slid after brokers downgraded the stock on concerns over the local lender's subprime exposure.
"The sell-off in Bank of China was contained by the bullish sentiment on H shares," said Alex Wong, director at Ample Finance Group, predicting that the stock would underperform in the next six to 12 months. The benchmark Hang Seng Index closed down 45.08 points to end at 22,921.89, posting a 12.4 percent gain for the week.
The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, rose 91.25 points to 13,178.09. Trade was quiet but robust, with mainboard turnover totalling HK$83.3 billion (US $10.7 billion) compared to Thursday's massive HK$114.5 billion. Bank of China, the day's most active stock, fell 5.4 percent to HK$3.87. The state-controlled lender said on Thursday it held US $8.965 billion in US subprime mortgage-backed bonds and US $682 million in collaterilsed debt obligations (CDOs) at the end of June. BoC Hong Kong slid 4.1 percent to HK$18.76. Morgan Stanley and UBS downgraded the stock to neutral.
China Life jumped 2 percent to HK$33.65 and rival Ping An surged 4.6 percent to HK$74.05, earlier tapping record highs. By late afternoon, mainland lenders had narrowed their losses and top Chinese lender Industrial & Commercial Bank of China ended the day up 0.2 percent at HK$4.91.
Datang International Power Generation Co Ltd surged 5.7 percent to HK$7.95, having earlier set a life high. Datang shares have risen 66 percent since Monday, when China announced the historic investment programme. Aluminium Corp of China raced up 4.4 percent to HK$16.22, having earlier tapped record highs. Jiangxi Copper also set a new high, before ending the day up 3.8 percent at HK$15.30.
Weiqiao Textile Co Ltd tumbled nearly 5 percent to HK$15.02. Australia was set to crack down on Chinese apparel and textile products after excessive levels of cancer causing chemicals were found in imported blankets, the Financial Times reported.