Stock Talk
PUBLISHED : Tuesday, 06 November, 2012, 5:57pm
UPDATED : Wednesday, 07 November, 2012, 9:44am

Market Wrap: HSBC earnings drag Hang Seng

Hong Kong stocks fell for a second day on Tuesday, dragged by heavyweight HSBC (0005.HK), after the Europe’s biggest bank reported a slump in net profit for the third quarter and as investors were cautious ahead of the US presidential election.

The benchmark Hang Seng Index lost 61.97 points, or 0.28 per cent, to finish at 21,944.43. Turnover stood at HK$54.9 billion, compared with a year-to-date average of HK$53 billion.

Funds continued to flow into utilities sector for a second day, reflecting cautious sentiment in the market. 

“The stock market was already over bought during the past months. Investors were just looking for an excuse to take profit,” said Francis Kwok, executive director at Bright Smart Securities & Commodities Group.

HSBC posted the biggest single-day decline since September 26, shedding 1.35 per cent to finish at HK$76.7.

HSBC saw net profit slump by 52 per cent during the third quarter to US$2.5 billion. Yet the results still exceed estimates of analysts from almost all major banks, including Morgan Stanley, Citigroup and Credit Suisse.

“While reported numbers are still clouded by significant one-offs, HSBC's underlying performance was very strong. We estimate growth in the continuing business is running at 26 per cent,” Barclays analysts led by Sharnie Wong said in a morning note.

Citic Securities (6030.HK) lost 2.32 per cent to finish at HK$15.14, after the Chinese broker said it completed a deal buying the remaining 80.1 per cent stake in Hong Kong-based brokerage firm CLSA from French company Credit Agricole SA for US$941.7 million.

China Agri-Industries (0606.HK) slumped 5.87 per cent to finish at HK$4.65 after announcing a right issue. The company proposes to raise up to HK$4.49 billion in a three-for-ten rights issue at HK$3.39 per share, representing a 31.38 per cent discount to the closing price on Monday.


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