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Jeanny Yu

Ray Chan

Hong Kong stocks ended their 10-day rally yesterday as investors took profits on worries that soon-to-be-released corporate earnings may disappoint after major mainland companies, including China Unicom, missed third-quarter results forecasts.
The Hang Seng Index fell 1.21 per cent, after gaining 4.3 per cent in the previous 10 trading days.
Turnover totalled HK$55.13 billion, compared with a daily average of HK$53 billion.
"Investors were reluctant to buy as the earnings were not pretty," said Sam Chiyung, a strategist with First Shanghai Securities. "Profit taking was widely seen in some small-cap firms such as cement and Chinese property players starting from Thursday."
Investors decided to lock in some profits ahead of the mainland's official purchasing managers' index on Monday.
China Railway Construction, China Shipping Development and Anhui Conch Cement were the top three most shorted stocks, according to data provided by Markit.
"[The] decline made sense as many issues were substantially overbought after such a long rally," said Ben Kwong Man-bun, chief operating officer at KGI Asia.
Bank of China was the most traded stock by volume and value yesterday, but it fell 0.32 per cent to finish at HK$3.14. On Thursday, the nation's No 4 lender by assets posted a 16.6 per cent increase in third-quarter net profit.
Unicom, the mainland's second-largest mobile-telephone operator, posted the biggest fall in more than three years after it missed third-quarter market estimates. The stock dropped 7.56 per cent to HK$12.72.
The state-owned firm reported a 27 per cent year-on-year growth in third-quarter net profit to 2.02 billion yuan (HK$2.5 billion). That compares with a forecast of 2.2 billion yuan in a Reuters poll and 2.21 billion yuan in a Bloomberg poll.
"The mobile business was slightly weaker than our expectations. We ascribe Unicom's net profit miss mainly to an increase in selling and marketing expenses on 'back to school' promotions," Deutsche Bank analyst Alan Hellawell, who has target price of HK$19.30 on the stock, wrote in a report.


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