Hong Kong and China stocks slip on oil

Hang Seng tumbles 1.2 per cent

PUBLISHED : Monday, 18 April, 2016, 9:09am
UPDATED : Monday, 18 April, 2016, 6:11pm

China and Hong Kong markets fell on Monday as oil prices tumbled after talks between major producers ended in Doha without any agreement on limiting output.

Hang Seng Index saw a narrower decline in late trading, closing the day down 0.69 per cent, or 146.29 points, at 21,170.18, after a 4.64 per cent rally last week. The Hang Seng China Enterprises Index slipped 1.27 per cent, or 117.14 points, to 9,097.84.

All the five most active shares in the Hong Kong market fell on Monday. CNOOC, China’s biggest offshore oil and gas explorer, led the losers with a 2.26 per cent retreat to HK$ 9.51. Sinopec, another major oil and gas company, fell 1.32 per cent to HK$5.24.

Linus Yip, Hong Kong-based chief strategist at First Shanghai Securities, said the fresh plunge in oil prices hit Asian stocks the most on Monday. West Texas Intermediate for May delivery was down 4.71 per cent at US$38.46 a barrel while Brent Crude for June delivery plunged 4.52 per cent to US$41.15.

Yip’s view was echoed by Louis Tse Ming-kwong, director of VC brokerage. “Oil company shares rebounded [last week] because the market anticipated a compromise (at the Doha meeting) between Iran and Saudi Arabia, but they couldn’t reach an agreement,” Tse said.

Tse added that investors also took profit before the US markets opened as they would likely be affected by the oil slump. “Oil prices went down this morning by about 6 per cent, and that’s worrying the market.”

But Yip said falling oil prices is also a good excuse for taking profit as the Hang Seng Index has been on the up for seven straight days, reaching a three-month high at 21,337.81 on Thursday.

“Hong Kong and Chinese stocks surged last week mainly on better-than-expected China data, but I am cautious on the stability,” said Yip, adding that he expected the continuing boost to China’s property market to be a positive for Hong Kong and mainland Chinese stocks.

Prices of China’s new residential homes rose 4.9 per cent year on year in March, according to a monthly survey of property prices across 70 large and mid-sized cities.

In China, the Shanghai Composite Index fell 1.44 per cent to 3,033.66, while the CSI 300 tracking large companies listed in Shanghai and Shenzhen dropped 1.34 per cent to 3,228.45.

The Shenzhen Composite Index lost 1.32 per cent, or 26.17 points, to 1,952.74, while the Nasdaq-style ChiNext shed 1.91 per cent, or 44.08 points, to 2,265.59.

Turnover in Shanghai and Shenzhen continued to shrink, to 557 billion yuan on Monday, from 585 billion yuan on Friday.

Elsewhere in the region, Tokyo’s Nikkei 225 extended its decline to close down 3.4 per cent, or 572.08 points, at 16,275.95. South Korea’s benchmark index fell 0.28 per cent while Australia’s edged down 0.37 per cent.

All three major US indices closed lower on Friday, with the Dow Jones Industrial Average finishing 0.16 per cent, or 28.97 points, down at 17,897.46; the S&P 500 slipping 0.1 per cent, or 2.05 points, to 2,080.73; and the Nasdaq Composite shedding 0.16 per cent, or 7.67 points, to 4,938.22.