Hong Kong shares end flat, Shanghai lower, as investors seek await fresh cues

Hang Seng gains 0.1 per cent; Shanghai Composite slips 0.8 per cent

PUBLISHED : Tuesday, 24 May, 2016, 9:15am
UPDATED : Tuesday, 24 May, 2016, 5:56pm

Hong Kong and mainland China stock markets ended flat to lower on Tuesday, amid cautious trade and light turnover.

Investors adopted a risk adverse stance amid uncertainty on the outlook for the economy and interest rates after the US Federal Reserve on Monday indicated several interest rate rises this year.

The Hang Seng Index edged up to close 0.11 per cent, or 21.4 points higher at 19,830.43. The Hang Seng China Enterprises index dropped 0.02 per cent, or 1.65 points, to 8,306.56.

Trading turnover in Hong Kong inched up 0.2 per cent to HK$44.75 billion, after hitting the lowest level of the year on Monday at HK$43.8 billion.

The Shanghai Composite Index fell 0.77 per cent, or 21.98 points, to close at 2,821.67. The CSI 300 dropped 0.77 per cent, or 23.67 points, to 3,063.56.

The Shenzhen Composite Index lost 0.9 per cent, or 16.39 points, to 1,804.6 and the Nasdaq-style ChiNext shed 1.08 per cent, or 22.72 points, to 2,075.51.

Trading turnover in Shanghai and Shenzhen narrowed to 371.4 billion yuan (HK$440.2 billion) from 419.3 billion yuan on Monday.

“The markets have lost direction so that the US rate hike becomes a hot topic again,” Jason Chan Chi-keung, Southwest Securities investment manager, said.

“Investors in Hong Kong are lukewarm towards the long-awaited Shenzhen Hong Kong Stock Connect and MSCI’s review on A-share market inclusion in June, while uncertainties in Brexit are still hanging there.”

Stephen Hui, chairman and chief executive of Luk Fook Financial Services, said the US interest rate rise was the reason investors were selling shares in Hong Kong and on the mainland.

“I do not think the US economy is good enough to support an interest rate rise but everybody is talking about the possibility,” Hui said. “This has haunted the stock markets in both Hong Kong and the mainland,” Hui said.

“There are no reasons for investors to buy into the market now and market turnover has gone down. I do not think there will be any improvement in the near term as there is no sentiment to encourage investors to invest,” Hui said.

The mainland China shares market has been trading in a cautionary direction since an article appeared in People’s Daily earlier this month, which cited an “authoritative person” as saying that China is heading to an “L” shape growth, indicating no more monetary easing in the near term.

Strong stimuli less likely as China braces for ‘L-shaped’ growth

Leading the loss in the mainland markets were hospitality and transportation sectors, with heavyweight banking, brokerage houses and property sectors sliding together. But automobile and textile sectors rose.

Stocks related to “World of Warcraft”---the popular computer game that will debut as a motion picture in mainland theatres next month---increased together. Shenzhen-listed Meisheng Cultural & Creative Corp shares jumped 7.39 per cent to 35.59 yuan. Huayi Brothers Media Corporation also rose 4.2 per cent to 14.39 yuan. Costume maker Metersbonwe shares also rose 4.54 per cent to 4.61.

In Hong Kong, construction, casinos, and Chinese banks shored up the benchmark. Insurance, coal and jewellery sectors fell.

Hong Kong Exchanges and Clearing shares fell 0.56 per cent to finish at HK$176.4 as sluggish turnover in local stock market threatened its profit.

Galaxy Entertainment Group shares outperformed its blue-chip peers, ending up 5.04 per cent to HK$25, after Macau Statistics and Census Service said April’s visitor arrivals fell 3 per cent year on year, but overnight visitors rose 5.6 per cent year on year and mainland tourists increased 1.2 per cent. Sands China shares also rose 2.2 per cent to HK$27.9.

Shampoo maker BaWang International (Group) shares jumped 17.72 per cent to close at 46.5 HK cents, as it won the lawsuit against Next Magazine which defamed its products six years ago.