Hong Kong stocks give up ground, dragged by mainland property developers, financials

The Hang Seng Index slipped 1.48 per cent to 30,965.68

PUBLISHED : Thursday, 22 February, 2018, 11:25am
UPDATED : Thursday, 22 February, 2018, 11:08pm

Hong Kong stocks dropped on Thursday, dragged lower by Chinese financials and property developers following a round of Wall Street losses overnight after the release of minutes from the Federal Reserve’s January meeting. Mainland markets were higher in resumed trading after a week-long holiday.

The Hang Seng Index slipped 1.48 per cent to 30,965.68, and the Hang Seng China Enterprises Index fell 1.25 per cent to 12,528.64.

Investors took profit after a market rally on Wednesday was viewed as excessive, especially given the volatility in global stocks.

Ping An Insurance dropped 1.67 per cent to HK$85.15 after Wednesday’s 1.76 per cent rise, China Construction Bank lost 1.99 per cent to HK$8.39 after rising 2.76 per cent and Industrial & Commercial Bank of China eased 2.25 per cent to HK$6.95 after climbing 3.34 per cent.

Chinese property developers tumbled with Evergrande Group sliding 4.02 per cent to HK$23.85, China Overseas Land and Investment easing 3.13 per cent to HK$27.85 and Country Garden falling 1.26 per cent to HK$14.16.

Internet giant Tencent Holdings fell 2.53 per cent to HK$446.40 while Chinese lens maker Sunny Optical Technology Group lost 2.80 per cent to HK$128.50.

“People were disappointed the mainland markets did not rise more than they did,” said Linus Yip, chief strategist for First Shanghai Securities.

“Hong Kong is already much higher compared to the end of last year, so the direction for now will mainly depend on global markets.”

HSBC Holdings eased 0.52 per cent to HK$79.55 after UBS lowered its target price to HK$78 from HK$78.90 and cut its forecast earnings per share 2 to 5 per cent citing weak growth momentum. Morgan Stanley has trimmed the bank’s share price target to HK$88 from HK$89.

However China Molybdenum, the largest molybdenum producer in China, bucked declines, climbing 8.53 per cent to HK$6.36. Bloomberg on Wednesday reported that Apple was seeking multiyear contracts to lock up supplies of cobalt, a key mineral used in smartphones batteries and electric vehicles.

Dairy producers were also in focus. Mengniu Dairy rose 5.58 per cent to HK$26.50, China Modern Dairy Holdings gained 5.11 per cent to HK$1.44 and Ausnutria Dairy added 5.84 per cent to HK$5.80.

The Shanghai Composite Index rose 2.17 per cent to 3,268.56 and the blue-chip CSI 300 Index – which tracks large companies listed in Shanghai and Shenzhen – gained 2.16 per cent or 85.77 points to 4,052.73.

The Shenzhen Composite Index advanced 1.89 per cent or 32.82 points to 1,771.97 while the Nasdaq style ChiNext increased 1.88 per cent or 30.99 points to 1,677.76.

So far this year, the Hang Seng Index is up about 3 per cent, compared to a 1 per cent gain for the S&P 500. The Shanghai Composite Index is down 1 per cent for the year and the CSI 300 Index is virtually unchanged.

On Wednesday, all three major US indices closed lower after minutes showed the US central bank’s rate-setting committee grew more confident in the need to keep raising rates, with most believing inflation would perk up amid an improving economic landscape.

The Dow Jones Industrial Average dropped 0.67 per cent or 166.97 points at 24,797.78, the S&P 500 fell 0.55 per cent or 14.93 points to 2,701.33, and the Nasdaq Composite eased 0.22 per cent or 16.08 points at 7,218.23.