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China stock market

Hong Kong, mainland stocks fall as investors turn cautious

PUBLISHED : Tuesday, 27 February, 2018, 9:16am
UPDATED : Tuesday, 27 February, 2018, 6:09pm

Hong Kong stocks retreated from morning gains to close lower on Tuesday as mainland investors turned cautious ahead of the opening of the annual National People’s Congress on March 5.

The Hang Seng Index fell 0.73 per cent, or 229.94 points, to 31,268.66, snapping two days of gains. It had ended the morning session up by 0.1 per cent. The Hang Seng China Enterprises Index, or the H-share gauge, slid 1.46 per cent, or 187.52 points, to 12,646.54.

Mainland investors sold a net 3.09 billion yuan (US$489 million) of Hong Kong shares via the Shanghai- and Shenzhen-Hong Kong stock connects, the biggest outflows since December 2016, according to Bloomberg calculations.

Bloomberg cited unnamed sources as saying that China plans to cut its budget deficit target to 2.9 per cent of total economic output from 3 per cent.

The budget deficit target is subject to approval at the National People’s Congress, when other tightening policies designed to curb excessive lending risks in financial markets and to cut overcapacity in the economy may also be rolled out.

“There is profit-taking pressure in mainland big-caps,” said Wei Wei, a trader at Huaxi Securities in Shanghai. “Though the valuations are not stretched, some investors want to cash out.”

Internet giant Tencent Holdings was the most heavily traded stock, falling 1.55 per cent to HK$446.

Apple supplier AAC Technologies Holdings eased 0.2 per cent to HK$155.20

Financial stocks had a bad day. China Construction Bank dropped 1.06 per cent to HK$8.38, Hong Kong Exchanges & Clearing slumped 2.03 per cent to HK$289.80 and HSBC Holdings lost 1.19 per cent to HK$78.60.

Country Garden, China’s third-largest property firm, was the worst performing blue chip, dropping 3.91 per cent to HK$14.24. China Resources Land dived 3.36 per cent to HK$28.80.

Chinese commodities also faced strong selling pressure. Copper miner MMG tumbled 6.77 per cent to HK$5.65, Maanshan Iron & Steel lost 3.69 per cent to HK$4.18 and Chalcoa lost 2.29 per cent to HK$4.70.

AIA Group, the third-largest insurer in Asia by market cap, bucked the trend, advancing 3.72 per cent to HK$65.55 after saying its value of new business, a gauge of the future profitability of new policies, increased 28 per cent in the year ended November 30.

In mainland trading, the Shanghai Composite Index slid 1.13 per cent, or 37.50 points, to 3,292.07, snapping six days of gains, and the CSI 300 Index of large companies shed 1.44 per cent.

However the ChiNext gauge of smaller companies rose 0.83 per cent.

Baoshan Iron & Steel tumbled 4.52 per cent to 10.14 yuan after rising 38 per cent over the past year. Coal producer China Shenhua Energy shed 5.11 per cent to 24.51 yuan and New China Life Insurance lost 3.42 per cent to 53.97 yuan.

Filmmaker Huayi Brothers Media, however, gained 5.57 per cent to 11.19 yuan after saying in a preliminary earnings statement that profit had increased 2.5 per cent last year.

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