Hong Kong markets slip as investors take profits in Chinese property and gaming stocks
Hang Seng closes down 0.46pc at 28,326.59 after the benchmark index last week rose on four consecutive days, at one point recording its highest level since December 2007
Hong Kong equities slipped from last week’s record highs on Monday, as investors chose to take profits, in Chinese property and gaming stocks especially, and waited for Chief Executive Carrie Lam Cheng Yuet-ngor’s maiden policy address later in the week.
The Hang Seng Index closed down 0.46 per cent, or 131 points, to 28,326.59 after the benchmark index last week rose on four consecutive days, amassing a gain of 1,036 points while at one point recording its highest level since December 2007. The Hang Seng China Enterprises Index, known as the H-shares index, also felled 0.64 per cent to 11,385.38.
On Monday, risk appetite eased while demand for gold as a safe haven rebounded amid renewed concerns over North Korea’s nuclear ambitions.
Its leader Kim Jong-un vowed afresh to continue building his country’s nuclear arsenal into a “powerful deterrent” to the United States, state media reported, hours after President Donald Trump said that “only one thing will work” in dealing with the isolated dictatorship.
Louis Tse Ming-kwong, a director at VC Brokerage in Hong Kong, said the market can now expect a period of consolidation and correction, after being driven by strong momentum last week. In particular, investors are easing off on property shares.
“Money from the north (Shanghai) is becoming cautious on blue chips,” he said.
“The Hang Seng Index is likely to stay at around 28,200 for the next few days ... But we still have a very good chance of it reaching more than 30,000 by the end of the year.”
Stanley Chan, director of research at Emperor Securities, echoed Tse, adding: “Investors took profits on Chinese property developers because of concerns over weak sales in first- and second-tier cities ... The market is likely to consolidate in the coming days as investors wait and see what new Hong Kong policies will be announced.”
Agile Property tumbled 7.15 per cent, Longfor Property fell 1.41 per cent, Sunac dropped 5.39 per cent, while Logan Property Holdings, which focuses on residential real estate development mainly in the Guangdong-Hong Kong-Macau Greater Bay Area, tumbled 4.3 per cent to HK$8.00, despite the group announcing its contract sales came in at 4.32 billion yuan (US$649 million) during September, up 71.4 per cent down from a year earlier.
Gaming stocks fell because Macau attracted less tourists than expected during last week’s “Golden Week” holiday, Chan said.
Galaxy Entertainment slid 3.2 per cent, and Sands China dropped 2.65 per cent. Melco International Development also decreased 1.6 per cent.
Shares in Television Broadcasts (TVB), Hong Kong’s dominant free-to-air broadcaster, bucked the trend by jumping 4.16 per centafter the Court of First Instance quashed a ruling by the city’s securities watchdog that gave all its shareholders equal rights to vote on a proposed share buy-back.
Sentiment among Chinese financials remained buoyant, however, ahead of the all-important upcoming 19th Communist Party Congress, starting in Beijing on October 18.
HK investors’ attention is likely to turn to Carrie Lam, who is due to unveil her policy blueprint in the Legislative Council on Wednesday.
The market is also likely to have its other eye firmly on China’s September “data dump” which started on Monday with the release of foreign-exchange reserves data. The consensus forecast is for an US$8.5 billion rise on the month, to US$3.1 trillion.
Meanwhile, A-shares in the mainland markets rose as Chinese markets resumed trading after the Golden Week national holidays.
The Shanghai Composite Index rose 0.76 per cent to 3,374.38 while the CSI 300 – which tracks the large caps listed in Shanghai and Shenzhen – gained 1.19 per cent to 3,882.21.
The Shenzhen Composite Index increased 1.3 per cent to 2,014.43, and the Nasdaq style ChiNext was up 1.2 per cent to 1,889.84.
US indices closed mixed on Friday, with the S&P 500 dropping 0.11 per cent to 2,549.33, the Dow Jones Industrial Average edging down 0.01 per cent to 22,773.67 and the Nasdaq Composite up modestly by 0.07 per cent at 6,590.18.
Minutes of the Federal Reserve’s last meeting are due on Wednesday, and may well show enough support for an interest rate move by the end of the year.