Heavyweight China Mobile drags Hang Seng Index lower although H shares maintain upward trend Hong Kong stocks failed to extend Monday's sharp rebound yesterday, ending the day lower after heavy selling of index heavyweight China Mobile. By contrast the rally in H shares continued, driving the index to an eight-year high. After an 118-point surge on Monday, the Hang Seng Index lost ground and finished 31.05 points or 0.2 per cent lower, at 15,517.01. Turnover picked up with shares worth $34.4 billion changing hands, compared with $31.2 billion on Monday. Kenny Tang Sing-hing, an associate director at Tung Tai Securities, said he believed the benchmark index would continue to consolidate as it had failed to break through its 10-day moving average of 15,600. At one point the index had touched 15,560.4, but then lost steam. ICEA Securities shared the same view, saying in a report that overseas market sentiment was weak on rate-rise concerns and this posed a key threat to the Hong Kong stock market. The securities house said January's sharp rally had provided room for profit taking with the result that the market had become sensitive to unfavourable news. Traders may make use of this weakness to earn some quick money, it warned, resulting in further downside risks. 'The fears of more rate rises than expected and the possible outbreak of bird flu in Hong Kong will continue to shadow the market, prompting investors to stay on the sidelines,' a dealer said. China Mobile led the index losers, falling 1.6 per cent to $36.75. Heavyweight HSBC was another selling target, dipping 0.31 per cent to $128. Rate-sensitive property counters moved into the red again, with Cheung Kong falling 0.92 per cent to $80.65, Sun Hung Kai Properties dropping 0.64 per cent to $78.20, and New World Development inching down 0.44 per cent to $11.35. H shares remained at centre stage, surging 67.96 points or 1.06 per cent to 6,471.47, thanks to strong mainland oil, commodities, and financial stocks. PetroChina surged 1.29 per cent to $7.85 after Citigroup raised the target price of the stock to $9 from $8.50, despite cutting its earning per share forecasts for last year by 10 per cent and 2007 by 5 per cent. The US investment bank said limited space capacity and an uncertain political backdrop boosted oil price volatility and supply security premiums, causing it to raise its global oil price forecasts to US$60 a barrel this year. Sinopec also benefited from an increased target price by Citigroup, rising 0.53 per cent to $4.75. The investment bank raised Sinopec's stock target price to $5.50 from $4.50, saying the possible relaxation of government price controls could boost the stock further, though full liberalisation was still distant in their view. Commodities stocks were yesterday's stars, with four of the top five H-share gainers coming from the sector. China Shenhua Energy, the best H-share index performer, jumped 7.51 per cent to $11.45. Angang New Steel surged 4.46 per cent to $5.85 and Yanzhou Coal finished 3.25 per cent firmer at $6.35. A possible Hang Seng Index constituent reshuffle on Friday fuelled gains by potential candidates, including Hong Kong Exchanges and Clearing, which added 4.15 per cent to $38.85.