Hang Seng settles marginally lower with mainland telecoms counters weighing on session's result The market finished marginally lower yesterday after a range-bound session in which the Hang Seng Index twice tried, but failed, to break above 14,200 points. Late in the afternoon, news of an explosion in Barcelona prompted a sell-off that trimmed 80 points off the blue-chip index within minutes. One policeman was injured and a bomb-sniffing dog was killed by the blast, but it turned out to be a minor incident and the market was able to recover about 60 per cent of those losses before the close. Still, the market reaction showed that even though global equity markets recovered quickly after the bombings in London last week, investors remained jittery about further terrorist attacks, one trader said. The retracement came after the index added 192.77 points on Monday in its biggest one-day gain in five months and, as a result, it was generally described by brokers as 'natural' or 'healthy'. 'The index is well supported at 14,000 and I think that the market is strong now,' said Linus Yip, a strategist with First Shanghai Securities. The current uncertainties about oil prices, the interest rate outlook and terrorism threats were not enough to pull the market down, he said. 'This time I feel the HSI is heading for [the recent high of] 14,365 and will break through.' Yesterday, the Hang Seng Index finished down 10.29 points, or 0.07 per cent, at 14,146.95, while the H-share index added 2.18 points, or 0.04 per cent, to close at 4,853.38. Hutchison rose for a second day amid speculation it is about to sell its Husky Energy unit at a big profit and following an upward target price revision by Morgan Stanley on Monday. The stock added 0.84 per cent to close at $72, and also helped lift its parent Cheung Kong 0.93 per cent to $75.75. HSBC rose 0.08 per cent to $124.30 as investors started to look ahead to its interim earnings on August 1. Analysts generally expect the market to get a boost in the weeks before the earnings season, with property companies and banks expected to post solid earnings thanks to a recovery in the economy. CNOOC added 0.51 per cent to $4.925 as the front-month oil futures on Nymex firmed slightly on Monday. PetroChina rose 0.83 per cent to $6.05. Property stocks were bought up in the afternoon, which pushed the sector index 0.46 per cent higher on the day. Sino Land rose 0.61 per cent to $8.25 and New World Development gained 0.54 per cent to $9.25, while Kerry Properties rallied 5.55 per cent to $19. JP Morgan upgraded Kerry to 'outperform' on Monday, citing growth potential for its logistics business. Miles Remington, head of sales trading at BNP Paribas, noted that a $969 million contract awarded by Cheung Kong for the construction of five residential buildings in Tseung Kwan O indicated that developers were still feeling confident about the property market outlook. 'And after concerns about rising interest rates early in the year, many fund managers are underweight property [stocks] and are looking to buy back in,' he said. Weighing on the index was China Mobile, which fell 0.53 per cent to $28.10, and China Unicom, which slid 2.32 per cent to $6.30. H shares drew some support from a rebound in the mainland stock markets where the A-share indices in Shanghai and Shenzhen finished more than 3 per cent higher. The logic being that if A-share valuations are driven higher, then H shares may benefit as well. Mobile communications systems provider ZTE, which is listed in both markets, saw its H shares gain 2.75 per cent to $22.40, while its Shenzhen-listed A shares jumped 3.85 per cent to 22.66 yuan. Another sign that investors are starting to believe that the A-share markets have reached the bottom was the 2.58 per cent gain in the FTSE/Xinhua A50 China Tracker Fund to $39.80. The fund, which listed in Hong Kong in November last year and tracks the top 50 A shares in Shanghai and Shenzhen, reached an all-time low of $35.30 on June 3, but yesterday's trading volumes of 3.27 million units was the highest since listing. Adding potential gloom to the market outlook, short-selling volumes remained strong for a second day. According to stock exchange data, $834.4 million worth of shares were sold short yesterday and $998.7 million on Monday. That compared with a daily average of $529.5 million in the first five months this year. 'People are quite disappointed by the market performance and are looking for further downside,' one institutional salesman said, noting that a series of data out in the US this week, including trade, consumer prices and retail sales, are likely to keep investors cautious in the near term.