Hong Kong shares ended marginally lower on Monday despite a positive lead from Wall Street, as investors followed a sell-off in China while awaiting key manufacturing data later in the week. The benchmark Hang Seng Index slipped 0.04 percent, or 8.41 points, to close at 22,704.5 on turnover of HK$47.16 billion (US $6.09 billion).
With few catalysts traders tracked Shanghai for most of the day after China's National Bureau of Statistics said home prices rose in 44 cities last month, down from 56 in March, with an oversupply of apartments and tight credit pushing developers to cut prices. The data, which showed average home prices slowing for the second month in a row, sparked fresh worries over China's property sector that weighed on the Hong Kong market.
US shares finished slightly higher on Friday after upbeat earnings from retailers JC Penney and Nordstrom, while the Commerce Department said overall housing starts rose 13.2 percent in April from March. The Dow rose 0.27 percent, the S&P 500 added 0.37 percent and the Nasdaq gained 0.52 percent. Thursday will see HSBC release its preliminary results on May manufacturing activity in China, with analysts hoping for signs of a pick-up in the world's number two economy.
Property developer China Resources Land fell 1.2 percent to HK$15.12 while China Overseas Land declined 1.2 percent to HK$15.12. Natural gas sector stocks were a bright spot, however, reversing recent declines after Credit Suisse said it thinks a "new gas boom" is set to take hold in China. Shares of China Gas Holdings, which the bank raised to Outperform, rose 5.8 percent to HK$12.50. In China the benchmark Shanghai Composite Index fell 1.05 percent, or 21.32 points, to 2,005.18 on turnover of 53.0 billion yuan ($8.5 billion).
The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.51 percent, or 5.17 points, to 1,014.19 on turnover of 58.4 billion yuan. The Shanghai index is now at a three-week low owing to property concerns as well as fears that a new wave of initial public offerings (IPOs) will lead to a share glut. More than 300 companies have disclosed draft documents for their planned IPOs, state media have reported. "Expectations of an IPO resumption and worries of an economic downturn still remain," Zheshang Securities analyst Zhang Yanbing told AFP.
The issue of rules to regulate how banks use the interbank market, a key source of short-term funding, also hurt sentiment, he said. China's central bank on Friday issued rules on interbank business, including capping the maturity of loans, to control financial risk. Brokerages and insurers led the declines, with Citic Securities 2.5 percent lower at 11.06 yuan and Haitong Securities fell 2.9 percent lower at 9.12 yuan. Ping An Insurance of China fell 2.1 percent to 38.71 yuan. Among property firms China Vanke, the nation's largest property developer by revenue, fell 0.1 percent to 7.69 yuan and Poly Real Estate Group eased 0.9 percent to 7.42 yuan.