Hang Seng Index
Established in 1969, the Hang Seng Index is the benchmark stock market index, monitoring changes in 48 constituent blue chip stocks. It is maintained by Hang Seng Indexes Company, a unit of Hang Seng Bank, which is controlled by HSBC Group.
More share placements may put pressure on Hong Kong market
Yesterday's slump might not be the last correction for Hong Kong stocks as more large and medium-sized placements could drag down the market further, say experts.
The Hang Seng Index fell 2.3 per cent yesterday, the biggest drop in three months, as markets across Asia slid amid renewed concerns over Spain's debt risks.
A surprise HK$24 billion share placement by state-owned oil giant Sinopec only made it worse in Hong Kong, where stocks fell the most in the region.
"Sinopec's placement was not a small one and should there be another offering of similar size, a big sell-off could occur, especially when the market is in a correction mood," Ben Kwong, the chief operating officer at KGI Asia, said.
Sinopec lost 6.4 per cent to close at HK$8.74.
The market was also affected by rumours that the government might double the stamp duty on non-local buyers of residential properties to stem runaway prices.
Around the region, Japan's Nikkei-225 Index fell 1.9 per cent while South Korea's Kospi lost 0.77 per cent.
The Shanghai Composite Index, however, bucked the trend with a 0.2 per cent gain after the nation's biggest developer by sales, China Vanke, reported a jump in last month's sales.
Cusson Leung, the head of Hong Kong research at Credit Suisse, said it was not unusual for investors to take profit after a strong rally.
But he expected property stocks to stay strong as he believed residential prices would climb a further 5 per cent this year, given the robust liquidity and limited home supply.
The Hang Seng property sub-index dropped 2.81 per cent, with index heavyweight Sun Hung Kai Properties closing 3.2 per cent lower at HK$121.3.
Some fund managers said this round of correction might only be short-term, given that the price-earnings ratio of 12 for the Hang Seng Index still looked attractive and worries over Spain's debt problems yesterday were largely overdone.
Victoria Mio, a portfolio manager at Robeco, said: "The selling pressure on Hong Kong equities could be short-term."
Although some sectors appeared to be a bit overbought, earnings growth could catch up to support valuation, Mio said.
Investors should not overreact to the problem in Italy and Spain, given that the euro was still strong, she said.