Daily Report

Hong Kong, Shanghai stocks slip, dragged by oil price slide, resumption of short-selling activities in mainland China

PUBLISHED : Thursday, 24 March, 2016, 9:07am
UPDATED : Thursday, 24 March, 2016, 7:30pm

Hong Kong and China stocks ended lower on Thursday as sliding crude oil prices weighed on energy shares, while the resumption of short-selling activities by some Chinese securities firms also added to the downside momentum.

The Hang Seng Index closed down 1.31 per cent or 269.62 points to 20,345.61. The Hang Seng China Enterprises Index swooned 1.94 per cent, or 172.20 points, to 8,701.13. Markets in Hong Kong will be closed for holidays on Good Friday and Easter Monday.

In Shanghai, the Shanghai Composite Index fell 1.63 per cent or 48.99 points to end at 2,960.97, reflecting its worst percentage decline in two weeks.

The losses coincide with remarks by Premier Li Keqiang at the annual Boao Forum that he is confident the Chinese economy will maintain an annual growth rate above 6.5 per cent in the next five years and that the government will take “decisive” action to shore up economic growth if momentum slips below “a reasonable range”. Li also said China will reduce the tax burden on small to medium-sized Chinese companies through the value-added tax reform.

In other mainland action, the large-cap CSI300 fell 1.68 per cent or 54.24 points to 3,181.85. The Shenzhen Composite Index lost 1.39 per cent or 26.43 points to 1,876.11. The Nasdaq-style ChiNext Index dropped 1.74 per cent or 39.34 points to 2,219.77.

Analysts from Shenwan Hongyuan Securities said investors were cautious after the regulators tightened rules recently to curb speculative trading.

“We expect the markets to go up in the near term, but the upside may be limited,” they said.

Reuters reported that 35 Chinese securities firms have resumed short-selling activities after a months-long suspension. Although there was no official ban, Chinese brokerage firms were urged to halt short-selling last summer when regulators intervened to shore up the stock market.

In a separate development, mainland authorities have launched a probe into illegal trading in bond markets, with employees at several financial companies under detention for investigation, according to media reports. Firms involved included ICBC, Haitong Securities and Dongxing Securities.

Dongxing Securities plunged 6.9 per cent to 25.94 yuan, Citic Securities sank 5 per cent to 17.43 yuan, and Haitong Securities lost 4.1 per cent to 14.13 yuan. ICBC dropped 0.9 per cent to 4.26 yuan.

Energy shares also suffered heavy losses after US benchmark crude oil futures slid below US$40 a barrel Wednesday in New York.

PetroChina, the country’s largest oil and gas producer, declined 1.9 per cent in Shanghai and 4.3 per cent in Hong Kong.

The state-owned energy giant reported Wednesday 2015 annual profit totalled 35.5 billion yuan, down 67 per cent from 107 billion yuan in the previous year, hit by plunging oil prices.

Sinopec, Asia’s largest oil refiner, saw both its Hong Kong and Shanghai shares tumble 2.6 per cent. The company will release its annual results early next week.

In the currencies, the People’s Bank of China on Thursday set the yuan reference rate against the US dollar at 6.5150, down 0.33 per cent, or 214 basis points weaker than Wednesday’s fixing. The currency is allowed to trade up to 2 per cent on either side of the reference point for the day.

With additional reporting from Naomi Ng.