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Blue chips slip as hefty losses in Japan temper investor caution

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China plays surge as buyers rotate out of real estate shares and industrial issues

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Hong Kong stocks ended slightly lower for the second consecutive day yesterday, with investors erring on the side of caution following heavy losses in the Japanese market and Monday's hefty share placement by Henderson Land.

However, counterbalancing blue-chip losses China stocks resurged as H shares and red chips recorded strong gains.

The Hang Seng Index fell 3.12 points, or 0.02 per cent, to settle at 11,720.8, with turnover robust as Hong Kong continued to draw in international institutions.

Analysts said domestic Asian stocks would continue to benefit from the weak US dollar. They said heavy losses in Japan - where the Nikkei-225 Index slumped 2.57 per cent - had given the market jitters.

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'At this level, investors have become quite cautious and the pull-back in Japan has affected market sentiment as well. We will probably enter a short period of consolidation,' said Alex Wong, a director of Rexcapital Asset Management.

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