Hong Kong stocks retreat as softness in banks and property overshadow gains in casinos, miners

The Hang Seng Index closes at 22,608.49, down 0.3 per cent in a session that saw miners climb to their best level in more than a year, tracking a global metal price rally

PUBLISHED : Thursday, 24 November, 2016, 9:07am
UPDATED : Thursday, 24 November, 2016, 6:48pm

Hong Kong stocks edged down on Thursday, as a rally in mining, insurance and casino stocks was offset by the retreat of the heavily weighed property, banking and oil sectors.

The Hang Seng Index closed at 22,608.49, down 0.3 per cent or 68.2 points, while the Hang Seng China Enterprises Index increased 0.13 per cent or 12.78 points to 9,678.77.

Financial markets in the US will be closed Thursday for the Thanksgiving Day holiday.

The mining sector jumped sharply, tracking the global metal price rally on expectations that US president-elect Donald Trump will invest heavily in infrastructure projects.

China Daye Non-Ferrous Metals Mining soared 19.72 per cent to a one-year high at 17 Hong Kong cents a share amid a surge in trading turnover. Fellow miner Yue Da Mining Holdings rocketed 14.29 per cent to 36 Hong Kong cents a share.

Jiangxi Copper Company closed 6.42 per cent higher to its best level since June, 2015, while CITIC Dameng Holdings rose 5.56 per cent to 57 Hong Kong cents a share.

Comex copper prices have risen 8.1 per cent in New York since the November 8 election, while on the London Metals Exchange zinc climbed 7.6 per cent during the period.

George Cheveley, portfolio manager and commodities specialist at Investec Asset Management, said the commodity price rally was supported by real demand, especially from within China, which accounts for about half of global demand for industrial inputs such as copper, coal and iron.

“In April, China’s commodities futures rallied but prices of the physical assets didn’t increase, but this time, the physical commodities prices are leading the rally...Regulators’ cooling measures on speculative trading didn’t dampen the prices, which shows the real demand,” Cheveley said.

Among other sectors, China Life Insurance was the best performer among blue chips, with the share up 3.07 per cent to HK$21.85, its best level since early January. The gains follow a recent Goldman Sachs research report which raised the share’s target price HK$30.2 from HK$26 thanks to a rising long-term bond yield in China.

New China Life Insurance gained 4.63 per cent to HK$39.55, reflecting its highest closing level seen since July, 2015.

Macau casino operator Sands China rose 2 per cent to a two-year high of HK$38.65, while Galaxy Entertainment gained 1.91 per cent to HK$37.4. The casino stocks shrugged off news on Thursday that Chinese authorities have initiated criminal proceedings against three employees of Australian casino operator Crown Resorts for alleged gambling crimes. The trio were among a group of 18 initially detained last month in Shanghai.

Hong Kong property stocks dropped as the November meeting minutes from policy-setting committee at the US Federal Reserve sent strong signals of an interest rate rise in December.

“It would be shocking for the Fed to hold steady on December 14,” Daiwa analyst Michael Moran said.

Hang Lung Properties shares fell 1.26 per cent to HK$17.22. Henderson Land Development fell 1.16 per cent to HK$42.45.

The banking sector retreated, paring back some gains from a rally on Wednesday. Industrial and Commercial Bank of China lost 0.65 per cent to HK$4.61 with China Construction Bank fell 0.18 per cent to HK$5.69.

Tencent Holdings, the most heavily traded blue chip, fell 1.08 per cent to HK$192.2, a three-month low.

On the mainland, most markets moved higher. The Shanghai Composite Index ended at 3,241.74, up 0.02 per cent or 0.6 points, while the CSI 300 — which tracks the large companies listed in Shanghai and Shenzhen — gained 0.4 per cent or 14.01 points to 3,488.74.

The Shenzhen Composite Index lost 0.06 per cent to 10,967.47 while the Nasdaq-style ChiNext shed 0.88 per cent to 2,146.63.

Brokerage, insurance and mining were among sectors that trade positive for the session, while banking and oil producers dropped.