Hong Kong stocks slip marginally lower, dragged down by energy, techs

PUBLISHED : Thursday, 23 February, 2017, 10:18am
UPDATED : Thursday, 23 February, 2017, 10:58pm

Hong Kong stocks retreated slightly on Thursday, easing from an 18-month closing high in the previous session as stocks were weighed by losses in the energy sector on concerns of poor results.

Mainland markets also fell, ending a three-day rally as cement and energy stocks retreated.

The Hang Seng Index fell 0.4 per cent to 24,114.86, while the Hang Seng China Enterprises Index slid 0.2 per cent to 10,521.53. Market turnover shrank 13.1 per cent to HK$81.8 billion.

“The recent movement of the Hong Kong market is largely driven by company results...profit taking and consolidation are well expected,” Linus Yip Sheung-chi, chief strategist First Shanghai Securities said.

Nonetheless, the Hang Seng Index still has jumped more than 3 per cent this month, driven by the bullish sentiment in US equities and an influx of mainland capital.

Morgan Stanley on Thursday raised its price targets for Chinese stocks, expecting the Hang Seng Index to rise to 26,000 by the end of this year in a base case scenario.

In a more bullish scenario, the benchmark index could hit 31,000, up 29 per cent from the current level, Morgan Stanley analysts said in a report.

“With incoming global economic data and earnings continuing to surprise on the upside, we expect further gains in our coverage markets near term – particularly for Japan and China,” they said, adding that a potential March US Fed rate increase could be a key risk.

New World Development Company was the best performer among the 50 blue chips, with shares rising 3.3 per cent to HK$10.1, after its interim results beat market consensus on Wednesday.

Sino Land shares went up 1.7 per cent to HK$13.2 as more than four investment banks raised their target price after it reported that core earnings met expectations.

The rally also spread to their peers Hang Lung Properties and Sun Hung Kai Properties, each of which gained around 1 per cent.

The recent movement of the Hong Kong market is largely driven by company results...profit taking and consolidation are well expected
Linus Yip Sheung-chi, chief strategist First Shanghai Securities

The casino sector also found strength after a research report by Nomura said Macau’s gross gaming revenue in February is likely to rise 10 per cent year on year to 21.5 billion patacas (US$2.69 billion).

Galaxy Entertainment rose 1.9 per cent to HK$36.9, while Sands China gained 1.4 per cent to HK$32.3.

In other trading the energy sector retreated, with PetroChina losing 1.6 per cent to HK$6.1. China Petroleum & Chemical slid 0.5 per cent to HK$6.2 and Kunlun Energy edged down 0.9 per cent to HK$6.8.

Kunlun Energy announced on Thursday morning that it expects to report a drop in net profit for 2016, including a possible impairment loss of 3 to 4 billion yuan in the natural gas distribution segment.

“The energy sector may be hurt by the financial results in short term, but we are positive with the sector in long term as there is an upside trend of crude oil price,” Yip said.

Tencent Holdings, the most heavily traded share, inched down 0.1 per cent to HK$214.8. China Mobile fell 1.3 per cent to HK$86.4.

Standard Chartered and insurer AIA are scheduled to post their annual results on Friday.

Over on the mainland, the Shanghai Composite Index ended its three-day rally due to a drop in cement and energy sectors.

The Shanghai Composite Index lost 0.3 per cent to 3,251.4, with the large-cap CSI 300 fell 0.5 per cent to 3,473.3. The Shenzhen Component Index edged down 0.1 per cent to 10,432.6, while the Nasdaq-like ChiNext gained 0.3 per cent to 1,926.

The mining and precious metal sector jumped sharply amid a price surge of precious metals such as cobalt, a key material of producing lithium-ion batteries for electric cars. Physical cobalt prices in China have almost doubled within past four months.. Major providers of the element are reluctant to sell their inventories as analysts expect a further price surge in the oligopolistic market, mainland newspaper Shanghai Securities News reported.

Shanghai-listed Zhejiang Huayou Cobalt shares closed at 56.6 yuan, rising by its 10 per cent daily limit. Its Shenzhen-listed rival GEM Co also jumped by its 10 per cent daily limit to 7.9 yuan.