Daily Report | Hong Kong stocks lose ground, Shanghai ends little changed

Hong Kong stocks slumped on Thursday to their lowest level since March 1, led lower by industrial conglomerate CK Hutchison Group after the European Commission blocked the company’s takeover bid for British cellular service O2.

The Hang Seng Index fell 0.70 per cent, or 139.83 points, to 19,915.46 on Thursday and the Hang Seng China Enterprises Index slipped 0.35 per cent, or 29.95 points, to 8,413.72.

“Now it is difficult to find a sector enjoying good performance in Hong Kong market. How can we expect the benchmark index to rise?” said Dickie Wong, executive director of research at Kingston Securities. “Investors are much concerned on the profitability of the heavily weighted Chinese banks and insurance companies whose valuations are relatively low.”

The top five active shares in Hong Kong all declined on Thursday. Tencent edged down 1.47 per cent to HK$154.2, while Hong Kong Exchanges and Clearing fell 2.26 per cent to HK$181.6 after the company reported a worse-than-expected net profit decline in the first quarter. China Life and Ping An dropped 1.08 per cent and 0.58 respectively.

Li Ka-shing’s CK Hutchison Group fell 0.91 per cent to trade at HK$92.2 per share after the European Commission rejected a proposed £10.25 billion (HK$114.77 billion) takeover of British mobile network operator O2 on Wednesday. The deal, which would have been the tycoon’s biggest overseas acquisition, was blocked on concerns that British mobile customers would face less market choice and higher prices as a result of the takeover, the commission said.

Wong said Hong Kong traders are cautious these days before the US Fed’s official announcement on whether it will increase interest rate or not this June. He also noted that China’s cooling exports and imports signal the country’s economic recovery is not that strong.