Hong Kong stocks edge lower as energy sector sell-off is sparked by overnight drop in oil prices

Hang Seng loses 0.09 per cent to 27,225.89 in mixed day’s trade, that also saw banks rise, and Tencent fall 1.6pc ahead of its interims on Wednesday

PUBLISHED : Tuesday, 15 August, 2017, 9:17am
UPDATED : Thursday, 17 August, 2017, 6:12pm

Hong Kong stocks inched lower on Tuesday, as shares in the energy sector tumbled while mainland bank stocks advanced.

The Hang Seng Index lost 0.09 per cent, or 24.34 points, to 27,225.89 while the H-shares index added 0.47 per cent, or 50.54 points, to 10,757.78 points. Turnover stood at HK$91.02 billion (US$13.6 billion).

Gains were led by commercial banks, as China’s official statistics showed total profit for commercial lenders climbed in the first half. ICBC was the best performing blue chip stock, up 2.8 per cent to HK$5.55. China Construction Bank added 1.09 per cent to HK$6.52.

China’s banking regulator issued a statement last night saying first-half profits for commercial lenders rose 7.9 per cent from the same period in 2016, while the level of non-performing loans in June did not increase from March.

“Investors are expecting interim results from some major banks this week,” said Peter So, managing director and co-head of research at CCB International Securities in Hong Kong. “The results of the large-cap banks will be a good indicator of market movement and the economy in the second half of this year.”

Investors were also looking out for interim results from Chinese online giant Tencent on Wednesday. The company’s stock dropped 1.61 per cent to HK$318.8, helping to drag down the indices.

Melco International Development gained 2.74 per cent to HK$18.76, after the casino operator announced a plan to spin off its Macau entertainment resort Studio City, and list it in the US.

However, Sinopec, PetroChina and Cnooc declined 3.2 per cent, 1.6 per cent, and 1.4 per cent respectively, to HK$5.67, HK$4.87 and HK$8.59.

“The energy sector sell-off was caused by the overnight drop in international oil prices,” said So. International crude futures declined overnight to their lowest level in three weeks.

Mainland China stocks rose slightly on Tuesday, with the Shanghai Composite adding 0.43 per cent or 13.90 points to 3,251.26 while the CSI 300 – which tracks the large caps listed in Shanghai and Shenzhen – increasing 0.31 per cent or 11.38 points to 3,706.06.

The Shenzhen Composite Index tacked on 0.4 per cent or 7.51 points to 1,887.28 while the tech-heavy ChiNext rose 0.28 per cent or 5.09 points to 1,798.57.

The weak gains followed news that US President Donald Trump had authorised an inquiry into China’s alleged theft of intellectual property, the first direct trade action his administration has taken against Beijing.

“It takes a long time to turn an inquiry into any concrete actions and the move is unlikely to prompt near-term change,” said So.

“We can see the market making further observations on this and the news didn’t appear to affect much of the trading in China.”

Strong performances in the banking sector also drove up mainland prices. Bank of China shares closed 3.32 per cent higher and China Construction Bank rose 3.03 per cent.

North Korea also signalled a halt in its plans to fire a missile near Guam, easing tensions in the region and investor concerns.

Other major Asian stock markets gained ground following the announcement. Tokyo’s Nikkei 225 advanced 1.11 per cent, or 216.21 points, to 19,753.31, boosted by a pullback in the yen as US dollar recovers. Australia’s S&P/ASX 200 gained 0.7 per cent to 5,730.40.

The South Korean markets were closed for Independence Day.

(Corrects Peter So’s title in the fifth paragraph.)