Hong Kong shares fell 0.2 percent on Monday amid wafer-thin volumes and the lowest turnover in nearly 16-months as investors turned their attention to the futures market ahead of the July contract expiry on Wednesday. Investors also stayed on the sidelines ahead of US jobless numbers, consumer confidence data and second quarter GDP figures, all due this week.
Shipping stocks were mauled following a Goldman Sachs downgrade on dry bulkers and an uninterrupted 11-session decline on the Baltic Dry Index. The index, which measures changes in the cost of shipping commodities, is at a three-month low.
China COSCO led decliners on the China enterprises Index with a more than 5 percent dip after Goldman Sachs downgraded the country's largest shipping firm to a sell rating from neutral on Monday, citing an oversupply of freight capacity in coming years and weaker expectations for 2009 and 2010. Pacific Basin, which was also downgraded by Goldman fell 3.5 percent. China Shipping Container Lines tumbled 6.3 percent and China Shipping Development dipped 1.3 percent.
The Hang Seng Index closed down 53.50 points at 22,687.21. Most blue chips including HSBC Holdings, China Mobile and Hong Kong Exchanges & Clearing closed lower. "With the futures expiry in Hong Kong and release of economic data from the US due this week and blue chip corporate earnings lined up for next week, investors have shown very little interest in the market today," said Patrick Yiu, associate director with CASH Asset Management.
Yiu also warned of more lacklustre trading days during the rest of the week. "Unless we get a very clear direction from the US, we could be drifting along this week. The US market may enter a consolidation phase this week."
Mainboard turnover fell to HK$41.5 billion ($5.3 billion) from HK$61.4 billion on Friday. The China Enterprises Index of top locally listed Chinese firms fell 0.2 percent. Yanzhou Coal was up 2.5 percent after the coal miner revised up its profit estimate for the first half of 2008, anticipating a jump in earnings of at least 220 percent as coal prices continued to rise.
Coal stocks were battered last week after Beijing announced stricter price controls on thermal coal. Yanzhou's larger rivals, China Shenhua and China Coal Energy, also joined the rally on Monday. China Shenhua, the world's most valuable coal company, was up 0.7 percent, while China's second largest coal miner gained 0.3 percent ahead of earnings later on Monday.
Offshore oil producer CNOOC rallied 0.4 percent, as oil prices bounced back from its seven-week lows, partly recovering from Friday's 3.6 percent loss. Asia's biggest oil and gas producer, PetroChina, which fell over 3 percent on Friday, moved up 0.6 percent.
Zijin Mining advanced 0.5 percent as gold prices gained ground on Monday. The gold miner was set to announce its half yearly earnings on Monday. China's largest international airline, Air China, gained 4.5 percent with the 16 percent correction in oil prices over the last two weeks spurring buying interest.