Hong Kong stocks break five-day rally, with Macau casinos the standout losers

Shanghai shares fall for a 3rd day amid thinner trade as Lunar New Year holidays approach

PUBLISHED : Thursday, 12 January, 2017, 9:16am
UPDATED : Thursday, 12 January, 2017, 10:25pm

Hong Kong stocks retreated from a two-month high on Thursday, as investors paused for breath following the longest winning streak in six months.

Optimism faded after US president-elect Donald Trump failed to offer details on his economic stimulus plans at a press conference.

Meanwhile, Shanghai shares posted a third straight day of losses, with department store operators and telecom companies among the standout losers.

The Trump optimism has seemingly faded, asM he didn’t give any new insight about fiscal plans to stimulate the economic growth
Huang Zhen, analyst, Zhongda Futures

The Hang Seng Index ended down 0.5 per cent or 106.33 points at 22,829.02. It had risen for five consecutive sessions, the longest bull run since July.

The Hang Seng China Enterprises index also dipped 0.1 per cent or 10.85 points to 9,723.05. Daily turnover shrank to HK$64 billion from HK$70 billion in the previous session.

“The Trump optimism has seemingly faded, as he didn’t give any new insight about fiscal plans to stimulate the economic growth,” said Huang Zhen, an analyst for Zhongda Futures. “The news conference has disappointed many market bulls.”

With Trump due to take office on January 20, traders are expected to remain cautious until they get concrete details on his policies, said Linus Yip, an analyst for First Shanghai Securities.

He said Hong Kong stocks are likely to see some downside pressure after recent rallies. The city’s benchmark HSI had risen more than 3 per cent since the start of the year.

In mainland China, stocks also declined. The Shanghai Composite Index dropped 0.6 per cent or 17.46 points to close at 3,119.29, down for a third day in a row. The CSI 300 – which tracks the large companies listed in Shanghai and Shenzhen – lost 0.5 per cent or 16.88 points to 3,317.62.

The Shenzhen Component Index and the Shenzhen Composite Index shed 0.8 per cent and 0.9 per cent respectively to 10,131.23 and 1,951.31. The Nasdaq-style ChiNext was down 0.4 per cent to 1,930.15.

Combined turnover for the Shanghai and Shenzhen markets decreased to 364 billion yuan from Wednesday’s 405 billion yuan.

“Investors are reluctant to make bets as the Lunar New Year holidays approach,” said Su Peihai, an analyst for Guangzheng Hang Seng Research. “The risk-on sentiment has also faded.”

Elsewhere in Asia, Japan’s Nikkei Average finished lower by 1.2 per cent.

Overnight in New York, Trump held his first news conference since the election and answered questions on subjects including Russia, Mexico and drugs.

However, analysts said he hadn’t given any details on his economic policies, which had spurred a rally in global equity markets in the past few weeks.

The dollar fell sharply after Trump spoke. But the price of gold, which is a traditional safe-haven asset, shot up to nearly US$1,200 an ounce. Oil futures also jumped.

Among individual stocks, Macau casinos were the biggest losers among the Hang Seng Index’s constituents, pulling back after recent rallies. Sands China and Galaxy Entertainment tumbled 2.5 per cent and 2.2 per cent respectively to HK$34.75 and HK$35.45.

However, gold miners bucked a downward trend after gold futures jumped, with Zhaojin Mining Industry up 1.4 per cent to HK$7.25 and Zijin Mining rising 1.2 per cent to HK$2.64.

Computer and smartphone giant Lenovo Group also advanced 2.2 per cent to HK$5.11.

In the mainland, mobile carrier China Unicom declined further after previous losses, falling 3.2 per cent to 6.68 yuan. Telecom equipment producer ZhongTongGuoMai Communication also plunged 10 per cent to 55.67 yuan.

Department store operators retreated following gains in the previous session, with Sanjiang Shopping Club sinking 5.6 per cent to 36.67 yuan, and Shanghai Xujiahui Commercial plummeting 5.3 per cent to 18.2 yuan.

Steel makers also weakened. Hunan Valin Steel was down 6.9 per cent to 5.65 yuan, and Xinjiang Ba Yi Iron & Steel was off 4.9 per cent at 6.43 yuan.