HK stocks edge back, but are still ahead 6.8pc over the past fortnight

Hang Seng Index closes at 21,964.27. However, market watchers fear momentum will struggle in the absence of monetary easing policies

PUBLISHED : Friday, 22 July, 2016, 9:26am
UPDATED : Friday, 22 July, 2016, 9:50pm

Hong Kong stocks slid slightly on Friday from the new high for this year reached earlier in the week, retreating below the technical threshold of 22,000 points.

The reverse came after a pullback in US and European markets amid concerns related to corporate earnings growth, said market watchers who hold mixed forecasts for Hong Kong stocks.

The Hang Seng Index shed 0.16 per cent or 36.22 points to 21,964.27, while the Hang Seng China Enterprises Index lost 0.28 per cent or 25.15 points to 9,031.93.

The market turnover in Hong Kong was HK$ 51.97 billion, shrinking to the lowest level in two weeks.

Telecommunication stocks were the biggest losers, down 1.23 per cent on average as a group. China mobile, the most heavily traded stock in the city, retreated 1.48 per cent to HK$ 96.55 after it surged 3.18 per cent on its Thursday announcement of 4G mobile subscribers increase.

CGN Power and China Shenhua Energy were the worst performed constituents among the H-share Index, retreating from big gains on Thursday after CGN Power’s parent firm, China General Nuclear Group, denied it was in merger talks with Shenhua’s parent firm. CGN Power shares plunged 5.44 per cent to HK$2.26, while Shenhua shares fell 2.04 per cent to HK$14.44.

Macau casino stocks fluctuated ahead of official data on Macau visitor numbers for June.

Sands China shares and Galaxy Entertainment Group bounced back from their weak opening, closing 0.54 per cent and 0.21 per cent up, respectively.

However, in terms of weekly performance, Hong Kong stocks recorded their second weekly rise in a month, jumping 6.8 per cent or 1, 400 points in the past fortnight.

“Hong Kong stocks over rallied in the past two weeks,” said Daniel So Pui-fung, China Merchants Bank International Securities Ltd strategist.

“I am very cautious of rising momentum because most good news has been reflected on the recent rise. Hong Kong stocks increased on the expectation of monetary easing policies, but until now, there are no such policies being carried out,” So added.

Hong Kong stocks increased on the expectation of monetary easing policies, but until now, there are no such policies being carried out
Daniel So Pui-fung, China Merchants Bank International Securities

Lukfook Financial analyst Ricky Huang said indications that Japan’s central bank will not unveil ramped up monetary stimulus, along with decisions by the European Central Bank and Bank of England to hold policy rates unchanged, dampened investor sentiment.

He said the benchmark is facing strong resistance at 22,000 and a short-term consolidation trend is “obvious”.

But in the mid term, he said the index will climb higher after finding support at 21,000.

“The risk of China’s economic hard landing has dissipated following economic data in the second quarter, while the Brexit fallout on global financial markets is not as huge as expected,” Huang said.

However, So from China Merchants Bank International Securities expressed concern that investors may underestimate the effect of Brexit on the global economy.

Mainland shares were also slightly lower. The Shanghai Composite Index stood at 3,012.82, down 0.86 per cent or 26.19 point while the CSI 300 fell 0.84 per cent or 27.36 points to 3,225.16.

The Shenzhen Composite Index decreased 0.91 per cent or 18.61 points to 2,019.57 while ChiNext shed 0.67 per cent or 15.13 points to 2,250.00.