Hong Kong, China stocks down as lack of southbound flow leaves market directionless

Bank stocks slip in Hong Kong as lack of flow from China leaves market unsupported

PUBLISHED : Friday, 23 September, 2016, 9:25am
UPDATED : Friday, 23 September, 2016, 10:10pm

Hong Kong and China markets closed lower on Friday after lacklustre trading, thanks to smaller southbound flows and a lack of catalysts to spur new buying.

The Hang Seng Index closed down 0.31 per cent or 73.32 points to finish at 23,686.48, while the Hang Seng China Enterprises Index slipped 0.99 per cent or 97.79 points to close at 9,796.

A second day without funds flowing from China to Hong Kong had taken away support for the market, and was particularly hurting banks which were usually a focus for Chinese buyers, said Haitong International Securities sales trader Andrew Sullivan.

“Without support for the market, we’re just drifting,” he said.

Bank of China fell 1.65 per cent, HSBC sank 0.85 per cent and ICBC was down 2.98 per cent.

Chinese internet giant Tencent was the big winner on Friday, passing $220 during trading to reach a new record before settling up 1.68 per cent at $218.2, still a 52-week high.

China Unicom also rose 4.29 per cent to $9.48 after Goldman Sachs upgraded the stock from neutral to buy.

Without support for the market, we’re just drifting
Andrew Sullivan, sales trader, Haitong International Securities

Car maker stocks were down, led lower by Geely Auto which fell 1.54 per cent. Tan Chong International fell 2.04 per cent to a three-month low.

VC Brokerage director Louis Tse Ming-kwong said automakers had seen gains earlier in the year, but traders were now profit taking as there was no impetus for the rise to continue.

The market was “a bit quiet” on Friday following a more lively session a day earlier, in the wake of the Fed’s policy rate decision, Tse said.

Investors needed better news for the market to reach the 24,000 level, he said, adding that more glum trading can be expected as investors are likely to adopt a “wait-and-see” attitude ahead of China’s National Day on October 1.

Capital Link Investment Holdings chairman and chief executive Brett McGonegal said investors had been left scratching their heads after all the drama leading up to the key policy announcements from central banks in Japan and the US.

But AMTD Financial Planning general manager Kenny Tang Sing-hing said the overall sentiment in the market was quite good and expects the market to track higher to reach the 24,000 level next week.

On the mainland, the Shanghai Composite Index sank 0.28 per cent or 8.41 points to 3,033.90 while the CSI 300 fell 0.47 per cent or 15.45 points to 3,275.67.

The Shenzhen Composite Index fell 0.50 per cent or 10.04 points to 2,008.12 while the Nasdaq style ChiNext slipped 0.55 per cent or 11.91 points to 2,156.51.

All three major US indexes closed higher on Thursday, the first full day of trading since the Federal Reserve and the Bank of Japan released their closely-watched interest rate announcements. The Dow Jones Industrial Average finished up 0.54 per cent or 98.76 points at 18,392.46 while the S&P 500 tacked on 0.65 per cent to 2,177.18. Meanwhile, the Nasdaq Composite climbed 0.84 per cent to 5,339.52.

Oil prices continued to move higher on the back of US government data showing a drop in crude inventories, with Brent crude futures rising 82 US cents or 1.8 per cent to finish at US$47.65 per barrel.

Hong Kong’s consumer price index figures for August, released on Thursday after the close of regular market trading, showed prices rose 4.3 per cent year-on-year, although it was down at 2.1 per cent once the effects of the government’s one-off relief measures were netted out.

Tokyo’s Nikkei 225 closed down 0.32 per cent, following a holiday closure Thursday, on its first full day of trade since the Bank of Japan announced it would maintain its negative 0.1 interest rate. South Korea’s Kospi closed up 0.21 per cent while Australia’s All Ordinaries rose 0.96 per cent.