Hong Kong and Chinese stocks slide as insurers and steelmakers retreat
Hong Kong stocks snapped a nine-day gain on Friday, as investors took profits in Chinese insurers amid a sector rotation, and as AAC Technologies slumped after brokers including JPMorgan said it expected the acoustics components maker’s second-quarter earnings to miss estimates.
The Hang Seng Index slipped 0.1 per cent, or 34.12 points, to 26,706.09 and the Hang Seng China Enterprises Index, also known as the H-share gauge, fell 0.6 per cent, or 59.70 points to 10,787.13.
“There’s a huge sector rotation today, with companies such as laggards catching up while profit-taking seen in Chinese financials, and other top companies,” Alex Wong Kwok-ying, director of Ample Finance Group said.
China’s second-largest insurer Ping An dropped 2.4 per cent to HK$57.3 and China Life dropped 1.4 per cent to HK$25.15.
Blue chip AAC Technology slid 12 per cent to HK$108.7 in the afternoon on Friday. Morgan Stanley said it expected the stock to underperform in the next 30 days, while JPMorgan expects the second-quarter results of the the Apple supplier to miss estimates, due to a major client’s price cut.
Meanwhile, Li Ka-shing controlled multinational, Power Assets Holding surged 10.5 per cent to HK$75.35 after saying it will pay an interim dividend of HK$8.27 per share, including a special dividend of HK$7.50. That helped push up CKI Holdings by 5.9 per cent to HK$69.7.
Laggard Legend Holdings gained 3.3 per cent to HK$21.60
In the mainland, China’s stocks fell for the first time in four days, trimming a weekly gain, as investors took profits from insurers and steelmakers, the best-performing large-cap companies over the past month.
The Shanghai Composite Index fell 0.2 per cent, or 6.89 points, to 3,237.98. It remains locked in a fifth straight weekly gain, as commodity producers rallied on better-than-projected first-half earnings. The CSI 300 Index of large companies lost 0.5 per cent, declining from its highest level in two and a half years.
A rally in low-valuation large-cap shares helped mainland equities to recover from a 1.4-per cent decline on Monday, which sent nearly 500 stocks down by their daily limits, following a weekend high-level government conference that highlighted stricter financial regulations. Gauges of materials and financials climbed at least 7.7 per cent over the past month, the best-performing industry groups among the CSI 300’s 10 sub-indexes.
“These sectors are rising too quickly and they need to take a breather here,” said Dai Ming, a fund manager at Hengsheng Asset Management. “Probably, they will resume gains after the correction as they are still the most-favoured sectors among investors.”
The sub-index of financial stocks slid 1.5 per cent on Friday, while that of material companies retreated 0.1 per cent.
Ping an Insurance Group of China fell 3.8 per cent to 51.96 yuan in Shanghai, while New China Life Insurance slid 2.6 per cent to 59.47 yuan.
Fangda Special Steel Technology lost 3.1 per cent to 11.13 yuan. The stock had surged 63 per cent through Thursday this year. Yunnan Aluminium declined 3.93 per cent to 9.11 yuan after rising 35 per cent this year.
CSG Smart Science & Technology led tech stocks higher after the State Council issued a development plan to bolster the artificial intelligence industry. The nation aims to make the industry a “new, important” economic growth driver by 2020 and targets 400 billion yuan (US$59.17 billion) for the industry output by 2025, according to the plan.
CSG, which makes industrial automation systems, rose 3.1 per cent to 22.07 yuan in Shenzhen, and Hangzhou Hikvision Digital Technology added 2.0 per cent to 30.59 yuan.
The proportion of artificial intelligence-related products may rise to 12 per cent of revenues for the surveillance-camera maker by 2020, compared with 0.3 per cent last year, according to a May report by Gao Hua Securities.