Daily Report

Hong Kong retreats on Monday morning, as uncertainties remain

Investors cautious before Fed and Bank of Japan monetary decisions and slew of results from Hong Kong listed blue chips

PUBLISHED : Monday, 25 July, 2016, 9:08am
UPDATED : Monday, 25 July, 2016, 10:29pm

Hong Kong stocks closed the morning session lower on Monday as investors took a wait-and-see attitude on the city’s equity market, with some uncertainties still lying ahead, market watchers said.

“Investors are cautious on Hong Kong stocks before the US Federal Reserve and Bank of Japan’s decisions on monetary policies later this week,” said Hanna Li Wai-han, a strategist at UOB Kay Hian (Hong Kong).

“At the same time, a long list of Hong Kong listed blue chips will report their latest results in coming days. And these results will decide market performance.”

The Hang Seng Index retreated from its strong opening to close down 0.29 per cent at 21,900.67 at Monday lunchtime break while the Hang Seng China Enterprises Index also fell 0.62 per cent or 56.43 points to 8,975.5.

Among the top five active shares in Hong Kong, China Construction Bank led the drop, down 1.84 per cent to HK$ 5.34. While Industrial & Commercial Bank of China followed, falling 1.37 per cent to HK$ 4.33.

In terms of sectors, mining and retail industries were among the biggest losers, down 0.70 per cent and 0.83 per cent on average as a group.

Macau casino stocks added on Monday morning after official data on visitor numbers there for June increased. Macau arrivals totaled 2,358,346 in June 2016, according to data released by the Statistics and Census Service, up by 4.9 per cent year-on-year and yet down by 4.8 per cent month-to-month.

Sands China shares and Galaxy Entertainment Group continued to jump, up 1.26 per cent and 0.21 per cent, respectively.

Local Hong Kong property developers jumped on Monday morning. New World Development added 0.79 per cent to HK$ 8.91. Cheung Kong Property Holdings increased 0.64 per cent to HK$ 55.05.

Li from UOB Kay Hian said that it was reasonable to expect that Hong Kong stocks had met some technical resistance after rising 6.8 per cent or 1,400 points in the last fortnight, especially in areas where uncertainty remains.

Hong Kong Exchanges & Clearing’s new stock closing auction session debuts on Monday.

The Shanghai Composite Index added 0.24 per cent to close 3,019.94, while the CSI 300 — which tracks the large caps listed in Shanghai and Shenzhen — increased 0.35 per cent points to 3,236.45.

The Shenzhen Composite Index added 0.27 per cent to 2025.04 while the Nasdaq style ChiNext increased 0.34 per cent to 2257.57.

Last Friday, all three major US indices closed higher. The S&P 500 rose 0.5 per cent to 2,175.03, a seventh all-time high in the last 10 sessions.

The benchmark recorded its fourth weekly increase, but it was the smallest weekly advance of the recent rally, only gaining 0.6 per cent last week.

The Dow Jones Industrial Average added 53.62 points, or 0.3 per cent, to 18,570.85, and the Nasdaq Composite Index increased 0.5 per cent.

In Asian trading on Monday morning, Tokyo’s Nikkei 225 added 0.07 per cent to 16,638.35 while Australia’s benchmark index increased 0.53 per cent and Korea’s stocks dropped 0.07 per cent.

Almost all Hong Kong-listed companies with American Depository Receipts (ADRs) traded in the US saw them close higher than their equivalent Hong Kong closing prices on Friday after conversion into the local currency.

China Telecom’s ADR closed 1.16 per cent higher at HK$ 3.87 from the HK$3.82 seen at the Hong Kong close. YanZhou Coal rose 1.35 per cent to HK$4.96 from HK$4.89 at the Hong Kong close while HuaNeng Power’s ADR increased 1.0 per cent, from HK$4.59 to HK$4.64.