Hong Kong stocks flat as investors wind down for mainland holiday

Hang Seng Index up 0.2pc to end at 23,619. Weak first day’s trading in Postal Savings Bank of China, which inched ahead just 1 cent

PUBLISHED : Wednesday, 28 September, 2016, 9:20am
UPDATED : Wednesday, 28 September, 2016, 10:10pm

Hong Kong stocks recovered earlier lost ground to close Wednesday slightly higher.

However, mainland-based traders wound down their risk exposure ahead of the week-long National Day holiday, said market watchers, who expect no further rebound for the local market.

The Hang Seng Index ended up 0.2 per cent or 47.75 points to 23,619.65 while the Hang Seng China Enterprises index dropped 0.27 per cent or 26.72 points to 9,719.84.

Market turnover for the main board in Hong Kong reached HK$ 61.55 billion, the lowest level in a week.

Postal Savings Bank of China, which debuted on Wednesday at HK$4.76, was the most active share in Hong Kong with turnover reaching HK$4.62 billion. But its shares traded within a tight range on Wednesday, inching ahead just 0.21 per cent to close at HK$4.77.

“There’s not much incentive [to buy] there,” VC Brokerage director Louis Tse Ming-kwong said, noting there were few news events on Wednesday to drive trading.

Tse said the Postal Savings Bank of China shares were not selling like “hot cakes”, as there had been too many bank IPOs in recent years, meaning the market was no longer interested.

Last week the bank raised US$7.3 billion, the world’s largest offering since Alibaba’s US$25 billion listing on the New York Stock Exchange in 2014.

Hannah Li, an analyst with UOB Kay Hian, said local investors were cautious, with southbound trading [through the Shanghai-Hong Kong Stock Connect] due to stop for a week from Thursday.

“With a lack of southbound inflows, the Hong Kong market expects to lose its rising momentum and financial shares including mainland banks and insurance companies will bear the brunt ,” added Li.

Mainland banks and insurers were among the biggest losers on Wednesday. Ping An Insurance lost 1.09 per cent to HK$40.9, while China Construction Bank and Bank of Communications dropped 0.34 per cent and 0.33 per cent, respectively.

There’s not much incentive [to buy] there...[PSBC shares were] hardly selling like hot cakes
Louis Tse Ming-kwong, director, VC Brokerage

Construction group Hsin Chong saw its shares sink 6.45 per cent, after Anonymous Analytics – a faction of Anonymous – published a critical report recommending short selling the stock, forcing the company to halt trading before the close.

China markets will be closed next week for the national week-long holiday, with markets due to reopen on October 10.

Haitong International sales trading managing director Andrew Sullivan said he expected to see some “derisking” ahead of the holiday closure.

“There’s not a lot to drive the market higher,” he said. “I think we’ll just drift lower.”

Li added she too cannot see any further rebound in October for Hong Kong stocks, as the US presidential election will be the potential black swan.

“Although Hillary Clinton seems a winner in the first US presidential debate, the success of Donald Trump cannot be underestimated,” said Li. “A Trump presidency could damage the US and global economy, but also threaten global trading.”

Mainland stocks also dropped in thin trading ahead of the national holiday.

The Shanghai Composite Index closed 0.34 points or 10.31 points lower to 2,987.86 while the CSI 300 – which tracks big companies listed in Shanghai and Shenzhen – dropped 0.30 per cent or 9.86 points to 3,230.89.

The Shenzhen Composite Index lost 0.15 per cent or 2.96 points to 1,978.30 and Shenzhen component Index dropped slightly 0.09 per cent or 9.81 points to 10,467.16 while the Nasdaq style ChiNext shed 0.05 per cent or to 2,139.63.