Hong Kong shares finished 2.8 percent firmer on Wednesday, clawing back some lost ground after a two-day slump, but turnover languished as worries about a potential widespread swine flu outbreak kept investors at bay. Turnover dropped to HK$50.7 billion ($6.5 billion) from HK$56.2 billion on Tuesday.
"The sentiment is not that of panic but that of caution. There is no indication on how bad the situation may get, so investors are guarded about taking new positions," said Alex Wong, director with Ample Finance Group. More countries have reported cases of the flu and others such as Australia and South Korea are testing for the virus.
The World Health Organisation raised its alert level to a step closer to declaring the first flu pandemic in 40 years. "Though Hong Kong has the SARS experience behind it, there are fears that this swine flu may be different and could potentially do more damage" he said. The benchmark Hang Seng Index ended up 401.84 points at 14,956.95 with HSBC taking the lead with a 1.7 percent gain.
Consumer goods exporter Li & Fung Ltd jumped 7.2 percent to HK$21.05 after the company said it expected to sign more outsourcing deals within months as cash-strapped retailers in the United States looked to cut costs in the economic downturn.
In 2009, Li & Fung could sign a similar number of outsourcing deals to the four signed last year and could be similar in size to the one the company signed with fashion retailer Liz Claiborne Inc in Feb, Li & Fung President Bruce Rockowitz told Reuters in an interview on Tuesday.
Top Asian oil refiner Sinopec Corp climbed 3.6 percent to HK$5.80 after it posted an 84.7 percent rise in first-quarter earnings from a year earlier as government reforms and lower crude oil prices allowed it to reverse losses in its refining business. Sinopec forecast that net earnings would rise at least 50 percent in the first half in a filing to the Hong Kong stock exchange late on Tuesday.
The China Enterprises Index of top mainland companies was 3.7 percent higher at 8,796.08 with ICBC in the lead with a 4.6 percent rally. Shares in the world's largest lender by market value has been on the rise since Tuesday after Allianz and American Express sold a part of their shares in the bank, removing the overhang of impending foreign investor exits that had been weighing down the stock.
Brokers also cited market talk of a possible reserve requirement cut at Chinese banks to explain sharp gains in mainland bank stocks in the afternoon session. Other bank shares also rose with China Construction Bank adding 3.8 percent, while Bank of China slightly underperformed its peers with a smaller 2.5 percent gain after reporting a 14.4 percent decline in first-quarter profit.
The big decliners from earlier this week, including airlines, property developers and bulk shippers, bounced back on Wednesday. Air China was up 11.1 percent at HK$3.60 after plunging 19 percent in the last two sessions while China Southern Airlines gained 10.2 percent. China Shipping Development added 9.5 percent while Hong Kong's largest property developer Sun Hung Kai Properties advanced 3.7 percent.