Hong Kong shares ended firm on Friday, registering their best week in more than a month, as strength in defensive sectors helped benchmark indices break through chart resistance. Mainland Chinese markets slipped further into the red, sending the CSI300 Index down to a fourth weekly loss in five and the Shanghai Composite Index to a fifth-straight weekly loss.
Shanghai bourse volume slipped 19 percent from Thursday, while turnover in Hong Kong declined 15 percent from the previous session. A 7.2 percent jump in the shares of China Unicom, the mainland's second-largest mobile operator, helped the Hang Seng Index close up 0.4 percent on the day and 2.9 percent this week at 19,640.8.
This was just above 19,595.4, its current 200-day moving average, a level it has struggled to break since mid-May. "The strength in China Mobile and China Unicom, which to me are more defensive, shows investors are still cautious," said Alan Lam, Julius Baer's Greater China equity analyst.
Adding to the defensive tone, Chinese internet giant, Tencent Holdings gained 1.9 percent, buoyed by a recent spate of favourable earnings reported by US technology peers. It is now up almost 50 percent in the year to date. Trade in China Unicom was almost triple its 30-day average volume after the company posted encouraging June 3G subscriber growth after markets closed on Thursday. It has now advanced 13 percent since closing near a two-year low on Wednesday.
It is currently trading at 18 times 12-month forward earnings, still a 16 percent premium to its historical median despite losses of more than 34 percent in 2012 to date, according to Thomson Reuters StarMine. Its larger sector rival, China Mobile gained 0.7 percent on Friday to bring its gains this year to 16 percent. It has outperformed Unicom this year after lagging its 47 percent jump in 2011.
But China Mobile is still trading at a 12-month forward earnings multiple that is a 6.3 percent discount to its historical median, according to StarMine. In the mainland, the Shanghai Composite Index ended down 0.7 percent on the day and 0.8 percent this week, its fifth-straight weekly loss.
The CSI300, an index that combines top Shanghai and Shenzhen listings and on which major Chinese stock index derivative products are based, shed 1.1 percent on the day and 2.1 percent on the week. The Shanghai property sub-index lost 1 percent on the day. Its decline came to 6.8 percent for the week, its worst showing since the week ending November 14, 2010 when it dived 9 percent. It is still up 17.2 percent in 2012, compared to the 1.4 percent loss on the Shanghai Composite Index.
Poly Real Estate lost 0.5 percent, bringing its decline for the week to 11.5 percent. It is still up 36 percent this year on, now forlorn, hopes that the government would roll back measures introduced in the past two years to cool off the property market. The central government told local governments on Thursday that they should not relax property purchase restrictions. Data released a day earlier had shown home prices stabilised in June, breaking eight straight months of decline and raising fears of fresh curbs in China's property sector.