Hong Kong stocks flat as CNOOC retreats, offsetting gains in consumer sector
Hong Kong stocks ended virtually flat on Tuesday, as oil producers fell after a disappointing interim result from heavyweight CNOOC, but consumer counters were lifted by promising earnings and by speculation that more mainland cities could follow Chongqing’s example and launch stimulus packages to boost local spending.
The Chongqing city planned to inject 1.5 trillion yuan into seven industrial sectors over three years to revive the economy, China Securities Journal reported on Tuesday. The news boosted the city's local lender Chongqing Rural Commercial Bank Co., Ltd. (3618.HK) and it closed 6.73 per cent higher at HK$3.3 Meanwhile, speculation that more cities might follow suit and boost spending, lifted consumer stocks like instant noodle-maker Tingyi (Cayman Islands) Holding Corp. (0322.HK), which jumped 6 per cent to end at HK$ 22.10.
But the gains were offset by oil players led by China’s top offshore energy producer CNOOC Ltd. (883.HK). The oil giant lost 3 per cent to HK$15.10 after saying interim profit fell to 31.9 billion yuan from 39.3 billion yuan a year earlier, as the weak global economy dampened demand and crude prices slumped.
“Earnings were still the focus of the day and CNOOC disappointed investors after posting an output decline,” Kenny Tang, Hong Kong-based general manager of AMTD Financial Planning Ltd, told SCMP.com. “I think the Hong Kong market is starting to edge upwards because there was strong resistance when the benchmark index fell below 20,000, but we need more positive news to break out of the band where it's currently stagnating," he said.
The benchmark Hang Seng Index closed down 0.02 per cent at 20,100.09, while the Hang Seng China Enterprises Index, which tracks the performance of Hong Kong-listed China enterprises, rose 0.32 per cent to close at 9,825.95.
The Hong Kong market traded in a narrow 162-point range on Tuesday, with subdued turnover of just HK$42.9 billion.
“Trading of Hong Kong shares seems to be locked into a extremely narrow range as investors have no clear indication of the prospects for the (mainland) economy,” Tang said.
China’s central bank pumped 220 billion yuan into the money system on Tuesday,in its biggest ever single-day injection. Market watchers said the move indicates that China prefers money market operations to tinkering with bank reserve requirement ratios (RRRs) to boost liquidity.
In Europe, the European Central Bank(ECB) on Tuesday denied reports that it plans to cap bond yields to bring down borrowing costs and Germany’s central bank again criticised proposed ECB purchases of bonds from struggling eurozone nations, saying they would carry “substantial risks,” casting a pall over hopes that the euro zone was edging towards a resolution of the sovereign debt crisis.
Sportswear jumped on Tuesday after earnings beats market estimates. 361 Degrees International Ltd. (1361.HK) surged by 8.5 percent to HK$2.16 after saying first-half net profit totalled 595.6 million yuan. Li Ning Company Ltd. (2331.HK) gained 6.9 per cent to HK$ 4.64.
The gaming sector rose after two financial institutions banks issued upbeat ratings for the sector. Sands China (1928.HK) jumped by 2.2 percent to close at HK$28.1 after Morgan Stanley said in a report that it would continue to maintain the stock as its “core Macau holding”. Citi was also bullish on the prospects of the enclave's gaming industry.