Hong Kong shares edged higher on Thursday, finding support at the 200-day moving average and helped by property developers and energy counters, while the Shanghai market eased as low volumes pointed to low conviction among investors. Hong Kong's Hang Seng closed up 0.7 percent, further above a chart level that has provided strong support over the past two months. Coal counters led gains on the China Enterprises Index, which ended up 0.5 percent.
The Shanghai Composite gave up early gains to dip 0.5 percent, although low volumes on exchanges in Hong Kong and China suggested market players were wary and preferred to remain on the sidelines. In a low volume environment where equity markets in Hong Kong and China have largely moved sideways after the routs in commodities prices over the past two weeks, investors have sought out bargains as volatility in financial assets recedes.
Developers in Hong Kong were the top performing sector as continued high office rentals, reports of insiders buying and attractive valuations have drawn investors to the sector. Cheung Kong trades at a 25 percent discount to its 10-year median forward 12-month earnings multiple, according to Thomson Reuters Starmine and after Thursday's gain has returned above its 200-day moving average, suggesting it could be poised for further gains. Energy counters continued to recover as commodities prices stabilised and oil prices steadied around $100 a barrel.
China shares traded lower on Thursday for the first time in three sessions as investors continued to tread lightly with few catalysts on the horizon. China's top coal producer, China Shenhua Energy Co Ltd, was the biggest drag on the benchmark, losing 0.6 percent, its first daily loss in three days as the Shanghai energy sector index lost 1 percent.
The benchmark Shanghai Composite Index was briefly above its 125-day moving average in early trade, before pulling back to finish 0.5 percent down at 2,859.6 on Thursday, staying within the same narrow 30-point range for the seventh consecutive session. Traders and analysts said the pullback from earlier gains showed 2,900 would be strong resistance and is a key level to breach if the index were to break upwards.