China stock market

Hang Seng slips lower, dragged by property developers

Hang Seng Index eases 0.1 per cent to 25,839.99, while Shanghai Composite Index rises 0.2 per cent to 3,191.20

PUBLISHED : Tuesday, 27 June, 2017, 9:12am
UPDATED : Tuesday, 27 June, 2017, 10:53pm

Hong Kong stocks slipped on Tuesday as declines in property developers offset optimism that some companies are set to benefit from the forthcoming anniversary commemorating the city’s handover to China.

The Hang Seng Index fell 0.1 per cent, or 31.90 points, to 25,839.99 at the close. The Hang Seng China Enterprises Index, which tracks the performance of Hong Kong-listed Chinese companies, dropped 0.3 per cent, or 32.59 points, to 10,498.07.

The Hang Seng property index sank 0.6 per cent, providing the biggest drag on the benchmark gauge, as the outlook of US monetary tightening in the second half weighed on the sector, according to Ken Chen, a strategist at KGI Securities.

``The Federal Reserve is likely to cut its balance sheet and raise interest rates in the second half,’’ said Chen. ``That’ll cause negative impact on liquidity in Asia and cause some outflows.’’

New World Development slid 1.4 per cent to HK$10.06 and Hang Lung Properties retreated 1.2 per cent to HK$19.06. China Resources Land fell 0.9 per cent to HK$22.40.

Bank of China Hong Kong Holdings rose to a fresh record, as investors bet the upcoming visit by Chinese President Xi Jinping to the city will bolster “Hong Kong” concept stocks.

The bank, the Hong Kong arm of Bank of China and one of the city’s largest lenders, jumped 1.5 per cent to HK$37.40. The gains were sparked by a price-target rise by Morgan Stanley, which forecast the lender to profit from a wider-than-expected net interest margin from 2017 to 2018. The investment bank set the new price target at HK$46.

“This week, investors are focusing on President Xi’s Hong Kong visit from June 29 to July 1, which might give a short-term boost to the market,” said Zhao Hongmei, an analyst with Zhongtai International Securities.

July 1 marks the 20th anniversary of Hong Kong’s handover to China by Britain.

BOC Hong Kong is a typical “Hong Kong” concept stock, which will be a hot investment theme in the near term, analysts said.

Chinese online giant Tencent climbed 1.4 per cent to HK$288 while coal producer China Shenhua Energy was up 1.2 per cent to HK$20.35.

Hang Seng constituent Geely Auto surged 4.1 per cent to a record close HK$16.16 after the Chinese car maker said it will change the board lot size for trading to 1,000 shares from 5,000 shares to “improve the liquidity of the shares and broaden the company’s shareholder base”.

Belle International, also an index component, will be removed from the benchmark index starting July 19, as the Chinese shoe retailer will be taken private by investment fund Muse Holdings and delisted from the Hong Kong stock exchange, according to a statement by Hang Seng Indexes Company late Monday.

Belle’s stock was up 0.5 per cent to HK$6.15.

On the mainland, the Shanghai Composite Index rallied in the last 30 minutes of trading to reverse an earlier loss, rising 0.2 per cent, or 5.76 points, to 3,191.20 for the highest close since April 18. The large-cap CSI 300 Index also added 0.2 per cent to 3,674.72, its highest level in 17 months. The ChiNext index slipped 0.1 per cent to 1,819.93.

In a keynote speech addressed to the World Economic Forum in Dalian on Tuesday, Premier Li Keqiang said China’s economic growth is gaining fresh momentum and there will be no hard landing in the world’s second-biggest economy.

Profits for the nation’s industrial companies increased 16.7 per cent from a year earlier in May, accelerating from a 14 per cent growth a month earlier, the statistics bureau said on Tuesday.

China Vanke pulled back 3.6 per cent to 25.54 yuan in Shenzhen following a recent rally. The stock soared by its 10 per cent daily limit for the past two trading days after the battle for control over the property developer’s management settled, with executives from shareholder Shenzhen Metro nominated as new board members and Chairman Wang Shi stepping down.