Hong Kong, China shares trim weekly gains as profit taking saps cyclicals

PUBLISHED : Friday, 13 September, 2013, 2:09pm
UPDATED : Friday, 13 September, 2013, 2:10pm

Hong Kong and China shares fell on Friday, led by Chinese cyclical counters from banks to materials as investors booked profits after robust gains earlier in the week.

At midday, the Hang Seng Index was down 0.5 per cent at 22,836.4 points, while the China Enterprises Index of the top Chinese listings in Hong Kong shed 1.4 percent.

The indexes are still set for a second-straight weekly gain, up 1 and 1.5 per cent, respectively.

The rally so far has been mainly short covering and some of the long money is beginning to return
Francis Cheung, CLSA

The CSI300 of the leading Shanghai and Shenzhen A-share listings fell 0.8 per cent, while the Shanghai Composite Index shed 1 per cent after closing on Thursday at its highest in three months.

On the week, they are up 5.5 and 4.3 per cent, set for their biggest weekly gain since the week that ended February 1. Losses on Friday also knocked the Shanghai benchmark off its most technically overbought level since July 2009.

“I think we are due for more gains and we are recommending clients start accumulating more beta counters in the Chinese banking and property sectors,” said Francis Cheung, CLSA’s managing director of Hong Kong-China strategy.

“The rally so far has been mainly short covering and some of the long money is beginning to return. So many were so bearish on China earlier this year, so even a return to equal weight will help lift the market,” Cheung added.

Still, on Friday some of these beta counters were among the biggest index drags. China Minsheng Bank shed 2.9 percent in Hong Kong and 4.3 percent in Shanghai.

Materials counters were broadly weaker. Zijin Mining sank 3.2 per cent in Hong Kong and 1.5 percent in Hong Kong as gold prices head towards their worst week in two months.

China coal counters extended losses as thermal coal stocks at China’s top coal port dropped to a three-month low and aggressive sales tactics set to keep a lid on any rebound in domestic prices.

Beijing had also unveiled comprehensive measures to tackle air pollution on Thursday that involve slashing coal consumption.

China Shenhua Energy tumbled 1.7 per cent in Shanghai and 4 per cent in Hong Kong. Power producers jumped on lower coal prices, with Huaneng climbing 3.5 per cent in Hong Kong.

Sun Hung Kai Properties shed 1.8 per cent after closing on Thursday at their highest since August 19. The world’s second-largest property firm by market value posed a 14 per cent fall in full year underlying profit, lagging forecasts while setting a weaker sales target for the next year.

Sino Biopharmaceutical rebounded 1 per cent as trading resumed on Friday, after the company said it was not aware of any investigation involving anybody connected to the company.