Hong Kong stocks dip amid lowest turnover this year as Fed rate decision looms

Market follows US stock gains.

PUBLISHED : Monday, 23 May, 2016, 9:35am
UPDATED : Monday, 23 May, 2016, 5:33pm

Hong Kong stocks dipped on Monday, with total turnover shrinking to the lowest level so far this year as investors remained cautious about a possible interest rate rise in the United States next month.

Mainland Chinese stocks inched up but analysts said the small rebound is unlikely to turn into a rally.

The Hang Seng Index reversed course from a morning upswing to close the day down 0.22 per cent, or 43.17 points, at 19,809.03. Hang Seng China Enterprises index edged up 0.06 per cent, or 4.63 points, to 8308.21.

Turnover in Hong Kong fell to HK$43.8 billion, the lowest so far this year.

The Shanghai Composite Index ended up 0.66 per cent, or 18.53 points, at 2,844.02 while the CSI 300 tracking large caps listed in Shanghai and Shenzhen inched up 0.29 per cent, or 9 points, to 3,087.22.

The Shenzhen Composite Index rose 1.45 per cent, or 26.04 points, to 1,820.99. The Nasdaq-style ChiNext rose 1.59 per cent, or 32.93 points, to 2,098.23.

In Hong Kong, mainland Chinese banks, mining, jewellery and watches sectors advanced. But shares of local developers slid amid concerns over a US interest rate rise.

Cheung Kong Property Holdings shares fell 1.31 per cent to end the day at HK$45.2. The Wharf Holdings dropped 1.08 per cent to HK$41.4.

HSBC Holdings lost 1.03 per cent to HK$48.2, while Tencent Holdings edged up 0.38 per cent to HK$159.1 amid news that the internet giant will launch its first smartphone.

BOC Hong Kong was the best performer among blue chips. The stock ended up 2 per cent at HK$22.9, after Bloomberg reported that the bank may sell its stake in Chiyu Banking to Xiamen International Bank and the Xiamen government in Fujian province.

In China’s A-share market, most sectors rose. Automobile parts makers, airlines, property and securities all tacked on small gains. But they were offset by a slide in heavyweight insurance and banking sectors.

Shenzhen-listed Maanshan Dingtai Rare Earth & New Material halted trading after announcing that SF Holdings, one of China’s most famous logistic firms, would seek a back-door listing by fully acquiring Dingtai for 43.3 billion yuan.

Total turnover in Shanghai and Shenzhen continued to be muted, at 419.3 billion yuan (HK$497.6 billion).

“Investors are still concerned about a possible interest rate hike by the US Fed in June. The Hong Kong dollar has recently been weakening against the greenback,” said Linus Yip, First Shanghai Securities chief strategist.

“With turnover falling, there isn’t much momentum for the benchmark to rise,” he said, adding that he expects the daily turnover to hover around HK$40 billion to HK$50 billion in the near term.

Investors should closely watch whether the Hong Kong dollar continues to slide and whether the Hong Kong Inter-bank Offered Rate (Hibor) jumps, which would indicate a tightening of liquidity as capital flows out of the market, Yip said.

Louis Tse Ming-kwong, director of VC Brokerage, said a small gain in Chinese stock markets would not lead to a rally.

“Investors remain cautious about China’s economic slowdown following weak economic data in April,” Tse said. “We do not see much buying interest in the A-share market.”

Li Lifeng, an A-share analyst at Sinolink Securities, said investors also worry that more senior management at listed companies would this year offload the shares they were forced by regulators into buying last year to shore up their prices in the midst of a market rout, Li said.

“Any offloading action would restrict upward momentum for the stock market. We’ll wait and see if the securities regulator brings more clarity to the matter,” Li said.