Hong Kong stocks fell 0.6 percent on Thursday in thin trade, tracking overseas markets, with oil refiners PetroChina and Sinopec leading the drop after crude prices hit a new record high. Oil producers bucked the broad market trend as they cheered crude prices hitting $123 a barrel.
While telecom plays such as China Unicom jumped on renewed speculation of an industry reshuffle. Market watchers said investors were cautious as they had been spooked by the index's 2.5 percent fall on Wednesday. "Trade is very thin as most traders sit on the sidelines. It is very critical at this level, the index can go either way," said Peter Lai, director of DBS Vickers.
"During the correction period, we can think of bargain hunting including in banks, retailers and Olympic-related stocks." He expects the Hang Seng Index to fall below 25,000 before it comes back again. But in the medium term, the market will gain support since the US subprime problems are near the end and the mainland A-share market is seen touching a bottom.
The benchmark Hang Seng Index closed down 0.63 percent at 25,449.79. The main index has dropped nearly 9 percent so far this year and is 20 percent off an all-time high hit in October. The China Enterprises Index of Hong Kong-listed mainland companies, or H shares, fell 1.64 percent to end at 13,886.59.
Mainboard turnover fell to HK$76.95 billion ($9.9 billion) from HK$101.3 billion on Wednesday. Shares in Asia's top oil refiner, Sinopec, fell 3.3 percent to HK$7.87 and China's second-largest oil refiner, PetroChina, dropped 2.4 percent as high crude prices further squeeze their margins because domestic fuel prices are capped by Beijing. Airlines also fell on high oil costs.
Flag carrier Air China fell as much as 5 percent before closing down 2.2 percent at HK$5.72, while China Southern dropped nearly 2 percent and China Eastern fell 2.6 percent.
Heavyweight China Mobile fell nearly 1 percent after the world's biggest cellular carrier said it was interested in the South Africa market but had not entered a bid for operator MTN, which is the subject of take-over interest by India's Bharti Airtel.
Ping An Insurance fell 3.5 percent after it said it had not changed its plan to offer local currency A shares. Rival China life, the most active stock for the day, fell 2.5 percent.
CITIC Resources Holdings Ltd, China's fourth-largest oil producer, jumped as much as 8 percent and the country's top offshore oil specialist CNOOC Ltd rose 1 percent to HK$14.02. Mobile carrier China Unicom rose 2.9 percent to HK$17.1 percent, while fixed-line operator China Netcom rose 2.6 percent.