Hong Kong shares close lower for fifth session on concern global equity woes not over yet

Property stocks the biggest decliners in Hong Kong, while Shanghai shares also end lower

PUBLISHED : Wednesday, 07 February, 2018, 9:11am
UPDATED : Wednesday, 07 February, 2018, 6:11pm

Hong Kong stocks fell for a fifth trading day on Wednesday, giving up an early rally sparked by a recovery in US stocks, as concerns resurfaced that a global sell-off is not over yet.

The Hang Seng Index dropped 0.9 per cent, or 272.22 points, to close at 30,323.20, reversing an intraday gain of as much as 2.9 per cent. It had tumbled 5.9 per cent for the biggest loss in more than two years a day earlier.

The Hang Seng China Enterprises Index, or the H-share gauge, fell 2 per cent to 12,433.29.

“I don’t think the market has recovered, there are still institutions who want to sell into the market rather than hold their stocks,” said Francis Lun, chief investment officer of GEO Securities. “Investors should reduce their holdings. The market has risen quite a lot in the past year and it is time to take profit. Sentiment has changed from unbridled optimism to scepticism.”

The Hang Seng Index rose to a record close last month after jumping 36 per cent in 2017, when it was one of the best performing stock indices in the world. But with recent losses its gains for 2018 are now only 1.4 per cent.

Still, there is optimism over the longer term outlook for Hong Kong stocks, which now represent an opportunity to buy on a dip, with the global economy still on a strong footing, analysts said.

“While a major market downturn is possible, it is not our current expectation,” said Richard Titherington, chief investment officer for emerging markets and Asia-Pacific equities at JP Morgan Asset.

“The underlying backdrop of an improving global economy, a weakening US dollar and a pickup in global earnings all remain supportive factors. Going forward, we see more opportunity in the companies with better earnings momentum, such as financials and exporters.”

In Wednesday trading, property stocks were the biggest drag on the index. China Resources Land tumbled 7.3 per cent to HK$27.80, China Overseas Land & Investment slid 4.9 per cent to HK$27.05 and Wharf Holdings also slumped 4.9 per cent to HK$28.45.

Financial companies also fell. China Construction Bank lost 2.6 per cent to HK$8.10 and Bank of China shed 1.6 per cent to HK$4.30. Ping An Insurance Group fell 1.5 per cent to HK$83.10.

In mainland China, the Shanghai Composite Index fell 1.8 per cent, or 61.39 points, to 3,309.26, erasing an intraday gain of as much as 1.6 per cent. The CSI 300 Index lost 2.4 per cent to 4,050.50 as big-cap shares fell to profit taking, while the ChiNext gauge of smaller firms rebounded 1 per cent to 1,616.40 after falling to a three-year low a day earlier.

Developers led the decline among big-caps, with property stocks accounting for eight out of the 10 worst performers on the CSI 300. Future Land Holdings plunged by the 10 per cent daily limit to 36.01 yuan, trimming its gains to 23 per cent this year. China Merchants Shekou Industrial Zone Holdings also slumped 10 per cent to 23.05 yuan and RiseSun Real Estate Development shed 9.8 per cent to 11.54 yuan.