Daily Report

Hong Kong stocks nudge lower in thinner trade before Easter

Geopolitical worries weigh on markets as tensions rise on the Korean peninsula

PUBLISHED : Monday, 10 April, 2017, 9:30am
UPDATED : Monday, 10 April, 2017, 10:03pm

Hong Kong stocks finished slightly weaker on Monday, posting a third straight day of losses, as investors remained wary of making big bets before the Easter holidays later this week.

Meanwhile, geopolitical worries weighed on markets after the US deployed a naval strike group near the Korean peninsula, a move analysts say might provoke Pyongyang.

The Hang Seng Index bounced between gains and losses during the day, before closing down 5.12 points, less than 0.1 per cent, at 24,262.18. It marked a third straight session of losses.

The Hang Seng China Enterprises Index, known as the H-shares index, also edged lower, by 0.2 per cent, or 20.01 points, to end at 10,253.79.

Turnover dropped sharply to HK$65 billion, down 27 per cent from Friday’s HK$88.8 billion.

“The thin trading volumes indicated that investors were sitting on the sidelines, because the Easter holidays are approaching,” said Victor Au, chief operating officer at Delta Asia Securities.

Linus Yip, chief strategist at First Shanghai Securities, said investors turned somewhat cautious after geopolitical risks increased on the Korean peninsula.

US and North Korea ‘closer to brink’ of accidental conflict

In response to the growing North Korean nuclear threat, the US Navy said on Sunday that a navy carrier strike group led by the USS Carl Vinson has been dispatched to waters near the Korean Peninsula, days after the US fired cruise missiles at a Syrian air base.

“Geopolitical worries have reduced investors’ risk appetite to some extent,” Yip said.

He expected investors would continue to take a wait-and-see approach, as they await a barrage of Chinese economic data, including consumer inflation and trade statistics due later this week.

On the Chinese mainland, the Shanghai Composite Index closed 0.5 per cent lower at 3,269.39. The CSI 300 — which tracks large companies listed in Shanghai and Shenzhen — ended down 0.4 per cent at 3,505.14.

The Shenzhen Composite Index and the ChiNext startup board index fell 1 per cent and 1.7 per cent respectively, closing at 2,008.5 and 1,912.45.

“The investigation of China’s top regulator has disturbed markets,” said Au.

He was referring to news that the Communist Party’s corruption watchdog has put insurance regulator Xiang Junbo under investigation for violating party discipline, in a move that caps a year-long shakedown of the country’s financial services industry.

China takes down insurance regulator, capping a year-long industry shake-out

In Hong Kong, Ping An Insurance Group and China Life Insurance both finished lower, down 0.8 per cent and 1.1 per cent respectively to HK$42.5 and HK$23.3. In Shanghai, China Life Insurance declined 0.6 per cent to 24.9 yuan. Ping An lost 0.4 per cent to 36.45 yuan.

Among other underperformers, Geely Automobile tumbled 4.9 per cent to HK$11.7, the biggest loser among the 50 blue-chip components. The drop came after the company reported a 2 per cent month-on-month decrease in its sales in March.

However, HNA Holding Group advanced 1.5 per cent to 34 Hong Kong cents, after the company offered to buy Singaporean logistics firm CWT Group for S$1.4 billion (US$1 billion).

Infrastructure-related stocks connected to the Xiongan New Area extended gains after rising sharply last week.

Beijing-based cement provider BBMG Corporation rallied 3.5 per cent to close at HK$4.76, adding to a 40 per cent rally last week. Nonetheless, BBMG chairman Jiang Deyi said in a filing to the stock exchange on Friday that he was unaware of “any reasons for these price or volume movements” or of “any inside information that needs to be disclosed.”

Tianjin Port Development Holdings also rose 1.3 per cent to HK$1.52.