Hong Kong investors set their phasers on 'sell' yesterday after another volatile session on Wall Street upset hopes for a Tracker Fund-induced rally.
The Hang Seng Index fell 127.09 points or 1.21 per cent to 10,325.46 on a thin turnover of HK$5.22 billion.
Thursday's completed take-up of the third-quarter Tracker Fund release failed to spark a follow-through rally, as analysts had hoped, after Wall Street continued to spiral lower on Thursday. The day's pitiful turnover in Hong Kong was a reflection of a wariness about investing in equities until the storms battering share prices globally subside.
'The outlook remains uncertain so most players are still [maintaining] a wait-and-see attitude,' said Kenny Tang Sing-hing, associate director at Tung Tai Securities.
Along with the now-commonplace spotty earnings picture for United States firms, investors are grappling with corporate fraud cases as well as a sputtering recovery. Further muddying the waters on Thursday was data showing jobless claims falling to a 17-month low but the Conference Board's index of leading indicators remained flat last month.
Alex Tang Yee-yuk, research head at Core-Pacific Yamaichi Securities said: 'Investors are not convinced that the market has seen the bottom so are just trying to be cautious.'
Banking stocks were generally weaker ahead of the listing of the Bank of China's Hong Kong operations next week. The sector was led down by HSBC Holdings which fell 0.84 per cent while Dah Sing Financial slipped 2.61 per cent.
Bucking the trend was JCG Holdings which jumped 2.01 per cent after a poor set of full-year results sent the company plunging 15.34 per cent on Thursday. Analysts said the 49 per cent fall in net profits was symptomatic of a dismal local economy.
'Just look at the rising unemployment rate and the bankruptcy rate. It's no surprise to us that the finance sector might suffer as a result,' said Core-Pacific's Mr Tang.
The bankruptcy rate and the unemployment rate are at record highs as the global economic slowdown continues to take its toll on Hong Kong.
GK Goh analyst Roger Luk said the near-term future did not look bright for JCG whose limited product focus - mainly consumer loans - would be challenged by nimbler and more diversified financial outfits such as Aeon Credit.
'Given the keener competition, we believe that JCG is unlikely to resume its previous strong growth in consumer loans,' he said.
Mr Luk downgraded his earnings outlook for JCG this year and next by 15 per cent and 10 per cent respectively while maintaining his 'sell' recommendation.
Shareholders in Shanxi Central Pharmaceutical had a Friday they would probably rather forget as the stock plunged 76.54 per cent. Rumours were rife of a forced sale by a brokerage, with most of the selling done by China Everbright Securities.
Close: 10,325.46 (- 127.09)
Turnover: $5.22 bln
Volume:6.61 bln shares
Day's high: 10,377.4
Day's low: 10,280.46
July futures: 10,312 (- 218)
August futures: 10,265 (- 195)