China stock market

China brokerage stocks hit by news of ‘disappearing’ Citic executives

The Hang Seng benchmark stages modest advance as investors weigh possibility of US interest rate hike

PUBLISHED : Monday, 07 December, 2015, 9:21am
UPDATED : Monday, 07 December, 2015, 6:59pm

A new round of disappearing brokerage executives dragged mainland securities stocks lower Monday even as broader indexes notched up small gains ahead of a busy week for China data.

With all eyes also on next week’s US interest rate decision the offshore yuan fell to a three month low against the greenback in anticipation the mainland currency will weaken further should US rates rise as expected.

After China’s largest brokerage, Citic Securities, said on Sunday that it could not contact its two top investment bankers Chen Jun and Yan Jianlin, the firm’s mainland listed shares sank Monday, eventually closing 1.81 per cent lower at 17.91 yuan (HK$21.65). Other brokerage houses followed suit with Haitong Securities off 0.98 per cent at 15.17 yuan and Huatai Securities 1.67 per cent weaker at 19.47 yuan amid wider fears that official probes into alleged market manipulation are nowhere near ended.

By comparison, the Hong Kong listed shares of mainland brokerages ended mixed with Citic Securities attempting to put a brave face on the disappearance of now six of its eight member executive committee by telling the Hong Kong exchange it “is in normal operation”.

The broader Shanghai Composite index finished 0.34 per cent higher at 3,536.93 on one month low turnover while the Shenzhen Composite index closed 1.26 per cent up at 2,261.41 with both markets recovering from a mid afternoon slump. The Hang Seng index dipped at the close to finish 0.15 per cent lower at 22,203.22.

Markets are quiet as “it’s toward the year end and everybody is waiting for the Federal Reserve next week,” said Ivan Li of Tung Shing Securities, referencing the anticipated US interest rate increase to be decided at next week’s meeting of the Fed’s policy setting committee. The offshore yuan fell 0.41 per cent late Monday afternoon to 6.4728 per US dollar. Data released by the People’s Bank of China after the stock market closed showed China’s foreign currency reserves fell by US$87.2 billion last month to US$3.44 trillion.

Energy companies were trading down, tracking the drop in oil prices below US$40 per barrel. Shares of CNOOC fell 4.87 per cent to HK$8.60, while PetroChina eased 2.17 per cent to HK$5.42. In the telecoms sector, China Mobile was up 0.55 per cent at HK$90.8.

The slow start to the week also reflected the bevy of data due from Tuesday onwards with investors looking out for monthly stats on China trade data, inflation, and industrial and retail numbers.

It was a different story at Bank of Jinzhou where shares leapt dramatically at the close to HK$5.1, a 9.4 per cent gain on the bank’s trading debut. The Liaoning-based city lender had earlier priced its initial public offering at HK$4.66 a share, towards the bottom end of an indicative marketing range, in part reflecting the flak the bank drew for issuing a 9.4 billion yuan loan to solar panel maker Hanergy whose own Hong Kong shares were suspended in May amid a regulatory probe.

Hong Kong’s biggest mover by turnover was property developer Sino-Ocean Land where shares closed up 8.96 per cent at HK$5.11, having jumped 16 per cent at one point in early trading after shareholders connected to the Nan Fung Group offloaded the majority of their Sino Ocean stake for HK$5.05, a 7.6 per cent premium to Friday’s close.