Hong Kong and China shares finish touch easier; China Vanke jumps on home price data

Hong Kong and China shares ended on Friday with slight losses after a early morning jump as the market was pulled between soaring banking stocks and a weaker US dollar.

It came after a positive week for markets in China, as optimistic macroeconomic news and the US interest rate rise saw gains across the board for Hong Kong and the mainland.

The Hang Seng Index fell slightly by the close of trading on Friday, finishing down 0.53 per cent to 21,755.56, although it had gained 1.35 per cent on the week. The H-Share index also ended down 0.33 per cent to 9,634.41.

In China, the Shanghai composite index closed Friday a miniscule 0.03 per cent off to 3,578.96. On the week though, Shanghai had risen 144.38 points or by 4.2 per cent.

The CSI300 was up slightly by 0.32 per cent to 3,767.91 while the Chinext index was down 0.19 per cent at 2,830.25.

The Shenzhen’s Composite Index slipped 0.28 per cent to close the day at 2,335.60.

Financials led the losing sectors on Friday, with industrial stocks the only bright spot. Tencent shares were the most traded stock of the day, dropping 0.2 per cent to HK$151.30.

Philip Securities director Louis Wong said the market in the mainland and Hong Kong had been divided between positive news from China and a drop in the US dollar following Japan’s surprise easing move on Friday.

“I think the declaration that the People’s Bank of China may cut again the reserve requirement ratio in the short term to mitigate the negative impact from the capital flow from the government translated into positive expectations for banking stocks,” he said.

“That was a major factor in the brief rally in the morning but because tonight it is Friday local investors tend not to own many positions over the weekend.”

Markets in the mainland and Hong Kong leapt more than a per cent at about 10.30 am on the news of the ratio cut, but dropped almost immediately afterwards.

In Japan, a surprise move by the Bank of Japan to speed up its easing programme by buying equity-traded funds, among other measures, whipsawed the Nikkei which eventually closed down 1.9 per cent at 18,986.80.

Over the course of the day, the US dollar was down almost half a cent from its high on Thursday, according to the Wall Street Journal’s dollar index, falling to 90.45 cents by 6 pm against a basket of currencies.

Meanwhile, China Vanke stocks were suspended after they rose 10 per cent on Friday, after a war of words erupted between its chairman Wang Shi and a consortium of companies. The company is China’s largest developer by sales.

It rose to 24.43 yuan in Shenzhen and in Hong Kong it rose two per cent to HK$22.9 before trading was suspended at the company’s request.

Wong said while the market would usually be quiet over the coming Christmas week, given the current volatility across the board it could be easier for shares to pick up unexpectedly. “Investors should be careful [and] also keep a close watch on the yuan and any depreciation,” he said.

In Hong Kong corporate news, Wang Kai, chief financial officer of Hong Kong-listed Sound Global has resigned, effective December 18, after a forensic accounting report found that 2 billion yuan (HK$2.39 billion) had gone missing from the Chinese water treatment firm’s accounts.

Shares in Sound Global were suspended in March after concerns were flagged by its former auditor Deloitte. In a filing on Friday, Zhang explains that the 2 billion yuan was a down payment on two potential water treatment plant acquisitions. The transactions were not properly recorded in Sound Global’s books.

“Upon the discovery of the Cash Discrepancy, Sound Group voluntarily refunded RMB2.0 billion plus

interest to the Company on 13 April 2015,” the filing said.