Skittish investors initially pushed Hong Kong stocks higher yesterday but beat a hasty retreat in the afternoon as some retail customers chose to lock in profits rather than stay in such an uncertain market.
'The market was too volatile, so I stopped buying and just sold,' said 61-year-old retail investor Mr Yuen, who would not give his full name. He said he had sold half of his HK$2 million investment in Hong Kong stocks in the past 20 days.
'Frankly speaking, the market is too high and I am worried about the bubble bursting,' he said.
Mrs Hong, a 60-year-old housewife, also said she tried to sell some of her holdings because the market had become 'dangerously high'.
After Friday's strong 3.18 per cent rise, the Hang Seng Index yesterday opened up 401.78 points or 1.44 per cent. The blue-chip index stayed above 28,300 points most of the morning but fell by as much as 0.65 per cent in the afternoon, ending the day 61.23 points or 0.22 per cent lower at 27,770.29.
Many retail investors apparently took the opportunity to sell some of their holdings when the index was above 28,000.
The H-share index fluctuated between a 3.72 per cent gain and a 1.14 per cent loss, closing 28.2 points or 0.16 per cent off at 17,511.82.
'In the morning we still saw a lot of money coming in to buy H shares, but the sentiment soured soon after the lunch break,' said a fund manager of a private equity fund. 'Overseas investors seemed to be those doing the selling.'
Francis Lun, a general manager at Fulbright Securities, said: 'The sharp fall in the late afternoon was the result of selling by European investors, who took the opportunity to take profits. The market is facing pressure at the 28,000 level. It will hover below that level for quite a while before being able to stay above it.'
Hongkong and Shanghai Banking Corp chairman Vincent Cheng Hoi-chuen warned retail investors to be cautious, saying the market was volatile and valuations had become relatively high. But he said it was hard to say whether there was a bubble.
While expecting the US Federal Reserve to cut interest rates again at the end of this month, Mr Cheng said local banks would have to examine the interbank rate at that time before deciding whether to follow suit.
Meanwhile, UBS was said to be helping Singamas Container Holdings sell up to HK$387.82 million worth of new shares at up to 10 per cent discount on its previous close.