Hong Kong stocks ended little changed on Tuesday as growing profit-taking after a two-month rally offset sustained inflows from mainland Chinese investors. Both the benchmark Hang Seng index and the Hong Kong China Enterprises Index closed a sliver lower at 23,703.01 points and 10,254.44 points, respectively.
The Hang Seng has risen about 8 percent so far this year, riding a wave of optimism that global economic growth is improving. The market has also been supported by rising southbound inflows through the Shanghai-Hong Kong Stock Connect scheme as mainland Chinese investors seek higher returns and a hedge against expectations of further depreciation in the yuan currency.
Over 25 percent of the daily Connect quota was used on Tuesday, compared with 25.4 percent on Monday and an average of less than 11 percent in January. "Hong Kong listings represent a good bargain for onshore investors, who have limited asset classes to invest in," said Nomura analysts in a research note. Most sectors retreated on Tuesday, but an index tracking services stocks gained 2.7 percent.