A weak China market, dampened by shares of large cap life insurers and caution ahead of US payrolls data, weighed on Hong Kong's benchmark stock index which only just managed to hold on to gains for a seventh successive day.
The Hang Seng Index rose 0.1 percent on Thursday supported by real estate developers while banks were broadly weaker on reports that China's central bank would not set a clear loan target for the year.
Shanghai's key stock index fell 0.5 percent to 2,831.9, stuck below the 250-day moving average that has capped gains for the past six weeks.
"But the market has now entered earnings season and corporate profits last year may prove to be better than expected," said a senior trader at a major Chinese brokerage in Shanghai. "So the index may be able to break through the level soon." Ping An Insurance (Group) of China Ltd fell 4.1 percent, the biggest drag on the Shanghai Composite, on rumours that the life insurer was planning to raise as much as 100 billion yuan ($15 billion) through a share sale. Ping An shares in Hong Kong fell 0.7 percent.
China's key stock index closed down 0.5 percent, led by Ping An Insurance (Group) of China Ltd , while the market consolidated ahead of a crucial technical level.
Ping An shares in Hong Kong, which trade at a slight discount to their historical forward price-to-earnings multiples, were a top performer among insurers in 2010, posting a 28 percent gain, far outperforming large rival China Life's 17 percent drop and the Hang Seng index's 5.3 percent rise.
Given that smaller rival PICC Property & Casualty has far more need to raise capital and strengthen its balance sheet, the trader at Daiwa said clients could look for taking a short position and bet on further declines. PICC shares closed down 1.6 percent.
Property developers in Hong Kong extended gains from Wednesday on good volume as investors were drawn by attractive valuations and on expectations that real estate prices would stay high as capital flows into Hong Kong remain steady.
The sustained low-yield environment and an abundance of liquidity would lift prices of real assets such as real estate and equities, in a trend seen continuing from last year.
Sun Hung Kai Properties rose 2.1 percent, the second biggest boost to the benchmark behind HSBC. Cheung Kong Holdings rose 2.2 percent.
Cheung Kong, the property flagship of billionaire Li Ka-shing, is said to be planning Hong Kong's first yuan listing.
Cheung Kong shares will also be supported by a 3G-led turnaround in Hutchison Whampoa of which Cheung Kong holds a 49.9 percent stake, said Eric Wong, analyst at UBS.
Hutchison shares rose 2.3 percent. Conglomerate Swire Pacific, which owns commercial properties including malls in Hong Kong, fell 3.2 percent.
Mainland Chinese banks were broadly weaker with China Construction Bank down 0.8 percent, the biggest drag on the broader market. ICBC fell 0.7 percent.
China will not set a clear lending target for banks this year, instead guiding the flow of credit based on observations about the broader economy, an official newspaper said on Thursday.