Hong Kong and Shanghai shares end lower, capping downbeat week

Mixed bag of US corporate results set the tone.

PUBLISHED : Friday, 13 May, 2016, 9:23am
UPDATED : Friday, 13 May, 2016, 8:03pm

Hong Kong stocks slumped to their lowest level in over two months on Friday, capping three consecutive sessions of losses, led lower by insurance and financial shares.

The Hang Seng Index edged down 1 per cent, or 196.17 points, to 19,719.29. The Hang Seng China Enterprises index dropped 1.34 per cent, or 112.33 points, to 8,301.39.

Among sectors, metals and coal producers were the biggest losers, dropping 2.4 per cent and 2 per cent respectively. The market weighted banking sector was down 1.2 per cent, while utilities fell 1.2 per cent.

Among shares with the largest turnover, HKEX fell 1.2 per cent to HK$179.5 and HSBC Holdings dropped 1.1 per cent to HK$47.30.

“This is very frustrating, because we used to have some support in these local companies but this time even those counters are being attacked,” Alex Wong Kwok-ying, asset management director at Ample Capital, said. He added that Hong Kong stocks would continue to remain under pressure in the near term and turnover would stay low.

“The problem is we’re lacking catalysts to turn around, that means we are stuck here with a downside bias. The direction is down, but the speed of decline will not be fast.”

Victor Au, chief operating officer at Delta Asia Securities said Hong Kong stocks will remain under selling pressure in the coming two months without new catalysts. He warned of further downside pressure on Hong Kong stocks from risks that include the UK leaving the European Union and a potential US interest rate hike in June.

“Hong Kong stocks cannot find fundamental support until the index reaches 19,400 points or even worse at 19,000 points,” he added.

Shares of Power Assets, an international utilities firm controlled by tycoon Li Ka-shing, rebounded by 0.73 per cent to trade at HK$75.50.

The company’s shares tumbled on Thursday after its board decided against declaring a special interim dividend. That dashed minority shareholders’ hopes for a special payout.

Li Ka-shing’s Power Assets shares fall after board decides against special dividend

In other trading, shares of CK Hutchison ended 1.1 per cent lower as chairman Li Ka-shing was absent from the annual general meeting owing to an illness.

Billionaire Li Ka-shing misses Hutchison annual general meeting through illness

Au from Delta Asia Securities said Hong Kong stocks may rebound if Zhang Dejiang offers up good news during his official visit next week. Expectations are that Zhang, who chairs the National People’s Congress Standing Committee and oversees Hong Kong affairs, may unveil additional details on the launch for the much-awaited Shenzhen-Hong Kong stock connect scheme when he visits from Tuesday.

In China, stocks fell for the fourth straight week. China’s benchmark Shanghai Composite Index slipped 0.31 per cent, or 8.37 points, to 2,827.11 while the CSI 300 tracking large companies listed in Shanghai and Shenzhen shed 0.49 per cent, or 15.2 points, to 3,074.94.

The Shenzhen Composite Index was down 0.32 per cent, or 5.70 points, to 1,784.33 and the Nasdaq-style ChiNext decreased 0.46 per cent, or 9.34 points, to 2,025.22.

Wong said the mainland markets lacked direction because there were no fresh cues for investors to follow.

“The A-share markets are not doing much,” Wong said. “China remains under pressure, but the selling is not too severe if you compare it with [Hong Kong].”