Hong Kong stocks end lower before holiday, mainland markets buoyed by services data

Hong Kong stocks ended marginally lower on Tuesday ahead of a public holiday, while mainland Chinese markets closed at their highest levels in nearly two months, led by gains in industrials and smaller companies following the release of data showing an upturn in the services sector.

The Hang Seng Index and mainland-tracking H-share index both gave up 0.4 per cent, ending at 22,989.22 and 10,649.45, respectively. Markets in Hong Kong will be closed Wednesday in observance of the Chung Yeung Festival. Trading will resume on Thursday.

The Shanghai Composite Index finished 1.1 per cent higher at 3,425.33 and the Shenzhen Composite Index gained 2 per cent to 2008.4.

Outstanding margin lending balance, an indicator to track people’s buying of stocks with borrowed money in the Shanghai and Shenzhen bourses, rose for a seventh day in a row nearing one trillion yuan Monday.

Julian Evans-Pritchard, the Singapore-based China economist with Capital Economics, said the detailed breakdown of China’s third-quarter GDP data released Tuesday, helped to shed light on activity in the service sector.

“As expected, cooling trading activity following the stock market rout pulled down financial sector growth. However, this was offset by the remaining service sector components which, after adjusting for seasonal factors, all contributed more to growth last quarter. The improvement in most of these components corroborates what we have seen in the monthly data – growth in freight and passenger traffic, property sales and retail sales all picked up in the third quarter,” Evans-Pritchard said in a note following the data release.

Jason Song, a strategist with Guotai Junan International, said the markets were also looking ahead to a gathering of senior political leaders, as the nation’s capital prepares for the annual meeting of the Communist Party's Central Committee from Monday.

“Investors are closely watching the government’s policies, especially on fiscal spending, to see if China’s economy could pick up from the fourth quarter,” Song said.

The small-company stocks dominated ChiNext Composite Index rose 3.2 per cent to 2,511.16. The Shenzhen listed LeTV, an online video group, rose 9.7 per cent to 53.14 yuan, after it announced Tuesday morning that it had taken a 70 per cent share in Beijing-based chauffeured rental car services provider Yidao Yongche.

In other mainland markets action, China Railway Group rose 7.9 per cent to 13.04 yuan and CRRC added 4.62 per cent to 15.18 yuan.

In Hong Kong, Hong Kong Exchanges and Clearing’s shares gave up 1.1 per cent to HK$203.

Tsingtao Brewery Co. advanced 4.8 per cent to HK$37 after it announced it would acquire the 50 per cent equity interest in Suntory Tsingtao Brewery and Tsingtao Brewery Suntory Sales Co. for 823 million yuan (HK$1 billion).

Macau casinos traded weaker after Nomura analysts said in a report that investors were being too optimistic that the sector had bottomed.

Macau Legend’s shares fell by 2.5 per cent to HK$1.18, Sands China dropped by 2.3 per cent to HK$27.95 while Wynn Macau nudged 0.9 per cent lower to HK$10.90.

Additional Reporting by Ben Westcott