Hong Kong blue chips snapped a three-session record streak to drop 1.2 percent on Monday, a day before the US central bank's rate decision meeting, as investors sold off recently outperforming property stocks following a government land auction.
"People are just taking a break," said John Schofield, director at Tempus Investments. Near term, Schofield said the market should head higher and even if the Federal Reserve cut its benchmark rate by just a quarter of a point, Hong Kong may not necessarily sink. "I think people just want to be sure of the direction of rates," he said. "The rally will continue."
The benchmark Hang Seng Index ended 298.77 points lower at 24,599.34 on light mainboard turnover of HK$81.1 billion (US $10.4 billion), compared to Friday's HK$101.5 billion. The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, slipped 0.2 percent to 14,676.39. The Hang Seng properties sub-index tumbled 5 percent.
A plot of land in Hong Kong fetched HK$4.55 billion ($584.2 million), 48 percent more than the asking price, in a government land auction. "The land auction was slightly below what the press was reporting," said Andrew Sullivan, sales trading director at Daiwa Securities.
"So there's a feeling that property counters were paying more for less certainty of a 50-bps cut; people are cautious ahead of the FOMC meeting." Blue chip real estate developers Sun Hung Kai Properties slid 4.5 percent to HK$115.60 and Cheung Kong (Holdings) Ltd slid 6.2 percent to HK$119.90.
Mainland insurers outperformed, as their investment yields should be boosted by China's announcement of an interest rate rise on Friday. China Life ended the day 0.5 percent higher at HK$38.2 and Ping An Insurance (Group) Co of China Ltd climbed 2.2 percent to HK$87.65. Both shares tapped record highs. China Coal jumped 2.7 percent to HK$17.38 after reporting first-half net profit nearly doubled from a year ago.