Hong Kong stocks down 1.8 pct this week as investors await bank earnings

Industrial and Commercial Bank of China fell 1.28 per cent and Bank of Communications was down 1.02 per cent ahead of third-quarter reports

PUBLISHED : Friday, 28 October, 2016, 9:22am
UPDATED : Friday, 28 October, 2016, 10:23pm

Hong Kong stocks ended the week with a fourth straight day of losses, as investors cautiously awaited a slew of bank earnings results for the third quarter.

The Hang Seng Index ended 0.77 per cent lower on Friday, at 22,954.81, with the Hang Seng China Enterprises Index falling 0.97 per cent to 9,515.32, dragged down by the banking, insurance and automobile sectors. Total turnover was up 16 per cent to HK$68.3 billion.

On a weekly basis, the Hang Seng Index lost 1.8 per cent, compared with a 0.61 per cent gain last week.

“I think a lot of people are a bit concerned about the earnings,” said Brett McGonegal, chief executive of Hong Kong-based Capital Link International.

McGonegal said he would be looking closely at the earnings of some of China’s banks.

“Market sentiment is very fragile right now. There’s a lot of apprehension ahead of the United States election,” he added.

Banks traded lower, with Industrial and Commercial Bank of China slipping 1.28 per cent to HK$4.63,

Agricultural Bank of China inching down 0.31 per cent to HK$3.22 and Bank of Communications falling 1.02 per cent to HK$5.81, before they unveiled their quarterly results on Friday evening.

China Construction Bank declined 1.23 per cent to HK$5.6, after it reported its net profit only increased 1.2 per cent year-on-year in the first nine months.

“The benchmark has been in an adjustment phase since it hit a one-year high at 24,099 in early September, but it seems to have reached an end, because it has spread to the strongest sectors such as automobile,” said Linus Yip Sheung-chi, First Shanghai Securities’ chief strategist.

The Hang Seng Index has surged by 4,000 since the Brexit vote in late June as investors rushed from developed markets to emerging markets. Profit-taking was expected, Yip said.

Geely Automobile Holdings dropped 1.2 per cent to HK$8.22 while Great Wall Motor Company fell for a third consecutive day since it announced worse-than-expected results, closing at HK$7.71, down 0.64 per cent.

China Life Insurance Company shares dropped 2.63 per cent to HK$19.28, after announcing a 60 per cent year-on-year drop in net profit for the first nine months, caused by lower investment income. Ping An Insurance Group edged up 0.25 per cent to HK$40.6 thanks to a 15.4 per cent year-on-year increase in third-quarter profit.

WH Group, the world’s largest pork supplier, saw shares slump 8.25 per cent to HK$6.25 after announcing that its second largest shareholder, CDH Investments, planned to reduce its stake to 12.94 per cent from 19.77 per cent through a shares placement at HK$6.25.

On the mainland, the CSI 300 Index, which tracks large caps in Shanghai and Shenzhen, closed 0.17 per cent lower on Friday at 3,340.13. The insurance, securities and banking sectors gained the most.

The Shanghai Composite Index fell 0.26 per cent to 3,104.27 and the Shenzhen Component Index decreased 0.72 per cent to 10,711.04. The Nasdaq-like ChiNex lost 0.78 per cent to 2,165.43.

Xinhuanet, the website under state-backed Xinhua News Agency, saw shares shoot up 43.99 per cent to end at 39.87 yuan on its trading debut in Shanghai, after raising 1.5 billion yuan in an initial public offering.

The CSI 300 Index has gained 0.37 per cent this week.