Hong Kong and mainland China markets fall in morning session
US markets dipped on Monday on weaker oil prices
Hong Kong and mainland markets fell on Tuesday morning, following an overnight dip on US markets, with most investors sitting on the sidelines, waiting for more clues about monetary policy from the US Federal Reserve and Bank of Japan.
The benchmark Hang Seng Index shed 0.81 per cent or 173.12 points to 21,131.32 at the end of the morning session, and the Hang Seng China Enterprise Index, tracking mainland-based companies, lost 1.14 per cent or 102.65 points to 8,883.68.
The mainland market had a seesaw session and closed lower by lunch time.
The mainland’s benchmark Shanghai Composite Index fell 0.28 per cent, or 8.16 points to 2,938.52. The Shenzhen Composite Index shed 0.12 per cent, or 2.31 points to 1,857.59. The Nasdaq-style ChiNext Index lost 0.16 per cent, or 3.39 point to 2,123.44.
Sectors including mining, non-ferrous metals and steel weighed on the mainland markets.
Alex Fan, managing director of GF Securities in Hong Kong, said the Hong Kong market was directionless as investors were closely watching meetings of the Bank of Japan and the US Federal Open Market Committee this week for hints on their monetary policies.
“The overall sentiments are optimistic now, as most of the people anticipate the US Fed will hold the rate hike pace until at least September,” he said. “However, the Hong Kong market could trade downward if the Fed changes its tone from dovish to neutral this time.”
Both the Hong Kong and mainland markets, and particularly the latter, had been overshadowed by recent bond default concerns, which seemed hard to resolve given that improvements in economic data were likely to be only temporary, he added.
Ali Health plunged by 8.02 per cent to HK$5.16 in Hong Kong, after the company disclosed the Hong Kong authorities had ruled that parent company Alibaba Group had breached certain rules in the conditions of their original merger in 2014. Alibaba Group is the owner of the South China Morning Post.
Cheung Kong Infrastructure dropped 1.67 per cent to HK$73.70, after it announced it was jointly injecting HK$7 billion with Power Assets, another company owned by Hong Kong billionaire Li Ka-shing, to buy a 65 per cent stake in the midstream assets of Canada-based oil producer Husky, another company owned by Li.
America’s S&P 500 Index fell 3.79 points, or 0.18 per cent, to 2,087.8 on Monday and the Nasdaq Composite Index shed 10.44 points, or 0.21 per cent, to 4,895.79. The Dow Jones industrial average fell 26.51 points, or 0.15 per cent, to 17,977.24.
Oil prices settled lower on Monday, pulling back from last week’s rally. West Texas Intermediate crude for delivery in June fell US$1.09, or 2.5 per cent, to settle at US$42.64 a barrel on the New York Mercantile Exchange.
Both the mainland and Hong Kong stock markets ended lower on Monday.
Mainland-based media outlet Caixin reported on Monday afternoon that the People’s Bank of China (PBOC) was asking banks to pare back lending this month. The central bank was asking banks to lower the amount of new loans to just 70 per cent of what was planned at the beginning of the month, the report said.
Caixin said on Tuesday morning the report had “mistakes”. But analysts broadly believe the PBOC has no choice but to rein in monetary easing after property prices rose sharply and loan growth accelerated strongly in the first quarter.