China stock market

Hong Kong stocks end lower, as profit-taking puts the brakes on Geely Automobile’s rally

Equity analysts say the market may be undergoing a technical correction, consolidating gains after reaching a near 10-year high last week

PUBLISHED : Monday, 23 October, 2017, 9:08am
UPDATED : Monday, 23 October, 2017, 10:58pm

Hong Kong’s stocks fell on Monday, as the year’s best-performing stocks including Geely Automobile Holding retreated, after the city’s benchmark rose to an almost 10-year high last week.

The Hang Seng Index dropped 0.64 per cent, or 181.36 points, to 28,305.88. The Hang Seng China Enterprises Index, or the H-share gauge, slipped 0.58 per cent to 11,491.07.

The mainland’s equity benchmarks were firm however on speculation of state intervention to ensure market stability amid the ongoing 19th party congress that is expected to see a reshuffle of its highest decision-making Politburo Standing Committee.

The Hang Seng Index appears to be consolidating after it rose to the highest level since December 2007 on Wednesday, and given that the gauge has climbed 29 per cent so far this year.

“Most likely, it’s a technical correction and the market needs to take a breather here to allow some investors to take profits from this high-flying level,” said Wei Wei, a trader at Huaxi Securities in Shanghai. “The good momentum is still there.”

Some of the biggest gainers on the benchmark this year fell. Geely Automobile Holdings dropped 2.1 per cent to HK$25.75 after surging more than 200 per cent year to date. CK Asset Holdings slid 1.2 per cent to HK$65.90 and Wharf Holdings shed 1.25 per cent to HK$71.35. The stocks have gained at least 38 per cent this year.

Financials also saw losses. Industrial & Commercial Bank of China was the biggest blue-chip lower, sliding 2.22 per cent to HK$6.16. Bank of China fell 1.24 per cent to HK$3.99 and China Construction Bank declined by 1.15 per cent to HK$6.85. AIA dropped 1.66 per cent to HK$59.2 and knocking off 38 points off the benchmark index.

Guangzhou R&F Properties slipped 0.65 per cent to HK$18.22 after the developer said in an exchange filing on Sunday that the China Securities Regulatory Commission had suspended the review of its application to list shares on the mainland, pending a change of sponsor.

Billionaire Stephen Hung’s gambling developer 13 Holdings slumped 48.90 per cent to HK$0.465 after resuming trade. The company was halted from trade on Friday ahead of its announcement to raise HK$1 billion through a rights issue and HK$740 million of debt for the completion of a hotel development in Macau.

However China Life Insurance gained 3.46 per cent to HK$25.45, after it said net income for the first nine months probably rose 95 per cent from a year earlier. Its Shanghai-traded stocks added 2.4 per cent.

Pharmaceuticals also saw advances, as President Xi Jinping delivered his 19th Congress Report, and mentioned several policies concerning health care to promote a “Healthy China”.

Guangzhou Baiyunshan Pharmaceutical climbed 7.2 per cent to HK$24.6, BBI Life Science surged 11.1 per cent to HK$3.01 and CSPC Pharma rose 2.1 per cent to HK$13.68.

In mainland trading, the Shanghai Composite Index rose 0.06 per cent, or 2.05 points, to 3,380.70. The gauge’s gain or loss has not exceeded 1 per cent on a daily closing basis over the past two months.

Shanghai Lingang Holdings rose 1.5 per cent to 29.79 yuan on speculation that Tesla will set up a plant in its industrial zone. The US maker of electrical cars has reached an agreement with the Shanghai government to build its own manufacturing facility in the city, The Wall Street Journal reported on Sunday, citing people briefed on the plan.