Shares listed in mainland China fell on Friday, suffering a second straight weekly loss and crimping gains in Hong Kong, as investors reduced risk on uncertainty about the policies of the country's new leaders. The Shanghai Composite Index and the CSI300 Index of the top Shanghai and Shenzhen listings each lost 0.8 percent on Friday, with the latter closing at its lowest since March 2009. They each lost nearly 3 percent this week.
The Hang Seng Index inched up 0.2 percent, while the China Enterprises Index of the top Chinese listings in Hong Kong gained 0.4 percent, each bouncing off one-month lows set on Thursday. On the week, they lost 1.1 and 2 percent, also their second-straight weekly losses.
Turnover in Shanghai was 24 percent below its 30-day average, while Hong Kong was 20 percent lower. "It's still unclear what kind of changes the new leadership are going to make, and this is feeding mainland investors' jitters as they look to cut losses going into the year's end after two straight annual losses," said Zhong Hua, a Shanghai-based analyst with Guotai Junan Securities.
China's ruling Communist Party unveiled an older, conservative new leadership line-up on Thursday that appears unlikely to take the drastic action needed to tackle pressing issues. But in their latest effort to shore up the mainland stock market, China's Ministry of Finance said a progressive tax regime will apply on stock dividends for individuals from January 1, 2013, with the tax rate heaviest for dividends from shares held for less than a month.
The CSI300 and Shanghai Composite indexes are now each down 7.2 and 8.4 percent this year after combined losses exceeding 30 percent in the two years before. On Friday, Chinese banking and energy majors extended their downward spiral in the onshore market. Bank of China slid 2.1 percent, while China Petroleum and Chemical Corp (Sinopec) shed 2 percent. In Hong Kong, shares of Chinese telcos were all broadly higher on the day, with the two smaller sector players China Unicom and China Telcom seeing their first daily gain this week, rising 2.9 and 4 percent respectively.
China Mobile provided the biggest single boost for the Hang Seng Index, rising 0.9 percent. SJM Holdings, Macau's largest casino operator, rose 0.8 percent after posting a 41 percent rise in third-quarter net profit after markets closed on Thursday. Limiting gains on Friday, global supply chain manager, Li & Fung slumped 4.7 percent to its lowest since mid-October after one of its major clients, Wal-Mart Stores Inc WMT.N posted disappointing quarterly sales on Thursday. Shares of Esprit Holdings dived 6.2 percent after the company said late on Thursday that its former chairman Michael Ying has not yet requested to join its board. Esprit surged 22 percent on Thursday after Ying doubled his stake in the ailing retailer.