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Stocks

Hong Kong stocks slip on profit taking on financials, ends week up 1pc

Mainland equities rise as liquor giant Kweichow Moutai climbs on increased first-half profits. Chinese property developers see losses

PUBLISHED : Friday, 28 July, 2017, 9:07am
UPDATED : Friday, 28 July, 2017, 10:51pm

Hong Kong stocks slipped on Friday as investors took profits on financials, paring this week’s strong gains, and following overnight losses in US technology stocks.

But analysts expect a slew of positive company earnings reports in coming weeks to stabilise the market.

A series of company earnings results will be announced in the coming week.

The Hang Seng Index slipped from Thursday’s highest level in 25 months, falling 0.6 per cent or 151.78 points to 26,979.39. The gauge rose 1 per cent for the week, a third straight weekly gain.

The Hang Seng China Enterprises index slid 0.9 per cent or 102.11 points to 10,756.08. Mainland equities rose as liquor giant Kweichow Moutai climbed on increased first-half profits.

Chinese property developers saw losses, with Gemdale shedding 2.6 per cent to HK$0.74 and Greentown China sliding 1.2 per cent to HK$10.22. Hong Kong developers, however, rose slightly. Sun Hung Kai Properties was up 1.8 per cent to HK$121.4, Hang Lung Property was 1.1 per cent higher at HK$19.54.

AIA Group fell 2 per cent to HK$59.50 despite reporting a 42 per cent increase in net profit during the first half, beating market estimates. The stock hit a new all-time high on Thursday, up 1.8 per cent to close at HK$60.7. Ping An fell 1 per cent to HK$57.20 while Manulife slid 1 per cent to HK$158.20.

Industrial & Commercial Bank of China dropped 1.1 per cent to HK$5.42 and China Construction Bank was 0.6 per cent lower to HK$6.47.

There is some profit taking after the Hang Seng Index made strong gains this week and shows overbought technical levels. But fundamentals haven’t really changed and strong earnings results next week by HSBC and Cheung Kong may stabilise the market again
Stanley Chan, director of research at Emperor Securities

Internet giant Tencent Holdings eased from Thursday ’s record high, dropping 1.2 per cent to HK$304.80.

“There is some profit taking after the Hang Seng Index made strong gains this week and shows overbought technical levels,” said Stanley Chan, director of research at Emperor Securities.

“But fundamentals haven’t really changed and strong earnings results next week by HSBC and Cheung Kong may stabilise the market again.”

Coal companies saw solid gains, with Shougang Resources rising 2.4 per cent to HK$1.72 and Yitai Coal climbing 2.6 per cent to HK$7.82.

D&G Technology Holding, a medium-to-large scale Chinese asphalt mixing plant manufacturer and service provider, climbed 3.2 per cent after it said net profit attributable to equity shareholders is expected to increase about 53 per cent in the first half compared to the same period last year.

The demand for recycling asphalt mixing plants in China has increased significantly, due to advocacy of national environmental protection policies, D&G Technology said.

On the mainland, the Shanghai Composite Index added 0.1 per cent, or 3.46 points, to 3,253.24, extending the week’s gain to 0.5 per cent. The Nasdaq style ChiNext eased 0.5 per cent after rallying 3.6 per cent for the biggest gain in a year on Thursday.

The CSI 300 Index – which tracks large caps listed in Shanghai and Shenzhen – edged up 0.3 per cent or 9.70 points to 3,721.89 and the Shenzhen Composite Index inched up 0.1 per cent or 2.41 points to 1,868.37.

Kweichow Moutai led the gainers among consumer stocks after the liquor maker said first-half profit rose 28 per cent from a year earlier on increase sales. The stock rose 2.1 per cent to 483.92 yuan in Shanghai.

Shenwan Hongyuan raised the 12-month price target for the stock to 600 yuan, citing the liquor maker may raise product prices early next year on rising demand, according to a research note on Friday.

At a two-day seminar on Thursday to prepare for the a once-in-five-years Party Congress later this year, Chinese President Xi Jinping said the country will deepen so-called supply-side structural reforms that include efforts to deleverage the economy and cut excess capacity, according to state news media Xinhua.

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