Hong Kong stocks erased earlier losses on Friday to post a four-day winning streak, as oversold sectors like shipping prompted bargain hunting. Commodity stocks also advanced, stoked by higher metal prices and imminent rebuilding efforts in China following severe weather that caused widespread damage across the country.
But fresh woes in the credit market weighed on global lender HSBC Holdings Plc Losses vanished in afternoon trade after Japanese equities reversed course, while in-line earnings posted by Bank of East Asia, Hong Kong's fifth-largest lender by assets, also lifted confidence.
"I treat this as a technical rebound," said Patrick Shum, strategist at Karl-Thomson Securities. "The fundamentals in the US are still weak." Federal Reserve chairman Ben Bernanke on Thursday cited growing risks to US economic growth and said the outlook for the economy had worsened in recent months.
"We're up a couple of days, down the next," said Matt McKeith, head of equity dealing at First State Investments. The benchmark Hang Seng Index ended up 0.5 percent at 24,148.43. The China Enterprises index of H-shares, or Hong Kong-listed shares in mainland companies, gained 2.2 percent to 13,843.52.
Mainboard turnover was HK$83.0 billion (US $10.6 billion) compared to Thursday's HK$94.3 billion. HSBC slid 1.2 percent to HK$114.8 after revelations that Swiss bank UBS was saddled with tens of billions of dollars in new exposure to risky US debt.
Shipping stocks posted further gains, bolstered by a sustained recovery in the Baltic Dry Index, an indicator for commodity-freight rates. China COSCO, leapt 4.1 percent to HK$23.95 in another day of heavy trade. China Shipping Container Lines (CSCL) soared 13.5 percent to HK$3.71.
Among materials stocks, Aluminium Corp of China (Chalco), the country's top alumina producer, ramped up a further 5.2 percent to HK$14.06 amid higher aluminium prices. Angang Steel rose a further 6 percent to HK$17.56 on booming steel prices. Jiangxi Copper surged nearly 5 percent to HK$16.56.
Cement plays outperformed in anticipation of rebuilding efforts in mainland China. Anhui Conch rose 5.7 percent to HK$58.5 and China National Building Material vaulted 6 percent to HK$23.75. Bank of East Asia finished at HK$41.65, down 3 percent, narrowing earlier losses after meeting forecasts with a 21 percent rise in second-half earnings.
Mainland power producers were among the day's worst hit on the back of high coal prices. Huadian Power International Corp Ltd tumbled 6.4 percent to HK$2.64 a day after saying its coal costs were estimated to rise 15 percent. Citigroup cut the stock to sell from hold. Huaneng Power dropped 1.6 percent to HK$6.68 and Datang Power slid nearly 3 percent to HK$5.65.