Hong Kong, mainland stocks lose ground as sentiment hurt by Beijing’s new property curbs

Hong Kong stocks seesawed in early trading but ended lower on Monday as sentiment was hurt by China’s latest curbs on property purchasing and after Wall Street finished last week with its worst decline in four months.

Investors are re-evaluating the Trump-inspired rally in the wake of the US President’s failed attempt to overturn his predecessor’s signature health care policy known as Obamacare.

The Hang Seng Index closed 0.7 per cent lower to 24,193.7 on Monday. Last week, the index added 0.2 per cent in its third straight week of gains.

The Hang Seng China Enterprises Index, known as the H-shares index, declined 1.1 per cent to 10,362.

Earlier on Monday, the National Bureau of Statistics reported that China’s industrial profits jumped 31.5 per cent year on year for the January-February period, versus a 2.3 per cent increase in December.

Nonetheless, sentiment remained subdued after Beijing on Sunday night rolled out fresh curbs on commercial property purchases by individuals in the latest government effort to cool the overheated property sector.

“It was quite a disappointing day,” said Alex Wong Kwok-ying, director at Ample Finance Group. “Sentiment was largely dampened both by Trump’s failed attempt to pass the health bill and Beijing’s property purchasing curbs.”

In addition to losses by property shares, Wong said other related sectors, such as steel making, might see declines soon.

“The new [US] administration’s hasty withdrawal of the failed health care reform bill vote certainly contrasted with their initial confidence,” said Jingyi Pan, a strategist for IG Group.

“Beyond the impact on health care, the vote had been seen as a test for the self-proclaimed dealmaker and the new administration’s abilities to deliver other promises including tax and infrastructure policies.”

Chinese property developer Kaisa Group spiked as much as 87 per cent in the morning after its shares resumed trading following a two year suspension. By the close, they were up 56.4 per cent to HK$2.44.

Among other market movers, Sinopec gained 0.5 per cent to HK$6.23 at one point, after the refiner said its 2016 net income jumped 44 per cent from the previous year. The oil giant narrowed earlier gains and closed 0.2 per cent up to HK$6.2.

However, Chinese financials mostly fell. China Merchants Bank closed 2 per cent lower to HK$20.7 after the lender said its non-performing loan ratio had increased to 1.87 per cent by the end of 2016, although its net profit rose 7.6 per cent to 62 billion yuan (US$9 billion).

ICBC and Bank of China dropped 0.8 per cent and 1.3 per cent respectively, trading at HK$5.12 and HK$3.9 at the close. China Construction Bank shed 0.9 per cent to HK$6.3. The three banking giants are set to unveil their annual results later this week.

On the Chinese mainland, the Shanghai Composite Index edged down 0.08 per cent to 3,266 at the close. The large-cap CSI300 closed 0.3 per cent lower at 3,478.

The Shenzhen Component Index and the start-up ChiNext index both closed lower, down 0.6 per cent and 0.9 per cent respectively to 10,581 and 1,947.

US stocks closed lower at the end of last week, with the S&P 500 Index logging its biggest weekly decline in more than four months.

Investors have started to question the credibility of President Trump’s pro-growth reforms after House Republicans scrapped his flagship health care bill on Friday, said analysts.