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