Hong Kong stocks wipe out early gains as ECB meeting, North Korea cast uncertainty; AIA, Tencent drag

Shanghai Composite snaps 4-day bull streak and ends down 0.6 per cent

PUBLISHED : Thursday, 07 September, 2017, 9:08am
UPDATED : Thursday, 07 September, 2017, 10:12pm

Hong Kong stocks coughed up early gains to end lower on Thursday, extending this week’s losses to 1.6 per cent, as investors still feel chilled about North Korea threat, while upcoming central bank meetings cast an air of uncertainty over the market.

Mainland Chinese stocks also halted a four-day win streak and finished lower.

The Hang Seng Index rose as much as 0.7 per cent in the morning, but saw gains vanish in early afternoon trading and dropped 0.3 per cent, or 90.84 points, to close at 27,522.92.

The index had fallen for five out of the past six sessions. So far this week, it has lost a combined 1.6 per cent, as investors worried about the military threat of North Korea following its most powerful nuclear test over the weekend. Concerns have grown about another missile launch this Saturday, which is North Korea’s national day.

The Hang Seng China Enterprises Index, known as the H-share index, also fell 0.3 per cent, or 30.05 points, to 11,098.72.

Daily turnover increased 12 per cent to HK$100 billion from Wednesday.

“The market sentiment is still cautious because of the geopolitical tensions and major central bank meetings ahead,” said Stanley Chan, director of research at Emperor Securities.

The European Central Bank officials will convene later in the day to discuss whether they will start tightening monetary policy. The Bank of England and the US Federal Reserve will also hold key policy meetings on September 14 and September 20 respectively.

Looking ahead, the market is likely to go through “a period of consolidation” with ups and downs in September, unless North Korea sinks into an “uncontrollable” situation, said Chan.

Index heavyweights AIA Group, Tencent, and HSBC were the biggest drag on the Hang Seng Index, contributing to a combined loss of 86 points.

AIA Group declined 1.8 per cent to HK$58.8, Tencent fell 1.1 per cent to HK$320.6, and HSBC pulled back 0.5 per cent to HK$74.15.

Mainland Chinese real estate developers, however, bucked the weak trend and advanced broadly.

“Some investors are speculating on mainland property developers, as September and October are the traditional golden season for new home sales,” Chan said.

Index component China Overseas Land & Development jumped 3 per cent to HK$27.5, and China Resources Land advanced 1.9 per cent to HK$24.75.

China Vanke also soared 9.6 per cent to HK$26.2, and China Aoyuan Property Group surged 8.3 per cent to HK$4.29.

In the mainland, the Shanghai Composite Index closed lower after a four-day winning streak, down 0.6 per cent, or 19.89 points, to 3,365.5.

The large-cap CSI 300 lost 0.5 per cent to 3,829.87. The Shenzhen Composite Index fell 0.3 per cent to 1,972.74.

Combined turnover for Shanghai and Shenzhen markets rose to 629 billion yuan from Wednesday’s 601 billion yuan.

Coal-related shares retreated, with China Shenhua Energy down 3.2 per cent to 20.75 yuan, and Zhengzhou Coal Industry & Electric Power off 4.3 per cent to 6.95 yuan.