Hong Kong and mainland indexes drop, fuelled by oil and coal sell-off

Hang Seng ends 0.83pc lower at 23,132,35. CNOOC down 2.67pc, PetroChina falls 1.99pc, China Petroleum & Chemical Corporation slips 1.39pc

PUBLISHED : Thursday, 27 October, 2016, 9:12am
UPDATED : Thursday, 27 October, 2016, 5:18pm

Hong Kong and mainland markets continued their slides on Thursday, as mainland regulators took measures to cool down speculative trading on commodity futures, hitting energy and oil stocks hard.

The oil shares were also affected by crude oil prices approaching three-week lows, which offset a small rally in Hong Kong property sector-related stocks.

The Hang Seng Index closed 0.83 per cent or 193.08 points down to 23,132,35, while the Hang Seng China Enterprises Index lost 0.93 per cent to 9,608.91.

“Investors are still selling,” said Castor Pang Wai-san, head of research at Core Pacific-Yamaichi International (HK). “The peak already seems to have been hit, and that also implies the market rebound is hitting the rocks in the short-term.”

Trading turnover remained low at HK$56.2 billion before the settlement of October stock futures on Monday. Southbound capital inflow through Shanghai-Hong Kong Stock Connect dropped to 850 million yuan (HK$972.8 billion) from 1.17 billion yuan on Wednesday.

CNOOC shares lost 2.67 per cent to HK$10.2, PetroChina Company fell 1.99 per cent to HK$5.41 and China Petroleum & Chemical Corporation dropped 1.39 per cent to HK$5.68, as crude oil prices approached three-week lows amid worries of the possible failure of efforts to reduce global output.

Zhengzhou Commodity Exchange – the third largest of China’s three futures exchanges in terms of contract volume, behind the Dalian Commodity Exchange and the Shanghai Futures Exchange – said it is raising transaction fees for its thermal coal futures contracts, which acted to reduce trading activity amid a surge in speculative investment in the volatile market.

The trading fee for thermal coal futures has now been increased to 12 yuan, three days after the exchange rose it from 4 yuan to 6 yuan to cool down speculative trading. The move led to a collective drop in the futures prices of thermal coal and coking coal.

Investors are still selling. The peak already seems to have been hit, and that also implies the market rebound is hitting the rocks in the short-term
Castor Pang Wai-san, head of research, Core Pacific-Yamaichi International (HK)

Shares in China Shenhua Energy Company fell 2.06 per cent to HK$16.14, while Yanzhou Coal Mining Company slumped 4.53 per cent to HK$5.9.

Cheung Kong Property Holdings (CK Property) was one of a few gainers with its shares up 0.63 per cent to HK$55.6 after announcing it was selling its Century Link project in Shanghai for US$2.95 billion to a company majority-owned by China Life Insurance.

Bank of China Hong Kong performed best among blue chips, with its shares closing 0.91 per cent higher at HK$27.7. The bank said its disposal plan of a 70.49 per cent interest in Chiyu Banking Corp was pending regulatory approval.

On the mainland, major indexes inched down, amid profit taking in the coal and mining sectors, as well as a fall in the telecommunication sector, said traders.

The CSI 300 Index, which tracks large caps in Shanghai and Shenzhen, fell 0.27 per cent or 9.11 points to 3,345.70. Shanghai Composite Index closed down 0.13 per cent or 3.96 points to 3,112.35 while Shenzhen Component Index lost 0.26 per cent to 10,788.97. The Nasdaq-like ChiNext dipped 0.09 per cent to 2,182.48.