Hong Kong shares close sharply lower; turnover tops 200 bln hkd - UPDATE
HONG KONG (XFN-ASIA) - Share prices closed sharply lower after an erratic session as investors locked in profits in the afternoon amid mounting fears that the market is set for a correction after its recent breathtaking run.
Dealers said that while interest in China stocks remains firm on expectations of more fund inflows from the mainland, the prospects of a major pullback are very real as the market has gained over 7,000 points since the middle of August.
The Hang Seng index closed down 719.81 points or 2.55 pct at 27,479.94, after moving in the range of 27,245.48 and a new all-time high of 28,871.04.
The index's previous all-time high was 28,256.80, reached yesterday.
Turnover also hit a new record at 209.81 bln hkd, surpassing the 163.13 bln achieved yesterday.
'There was no particularly bad news out there which served as a trigger for the pullback today,' said Tony Espina, dealing director at Goldride Securities.
'Nothing fundamental has changed in Hong Kong's trading environment and some investors simply decided to take some money off the table and take profit,' he said.
'After all, the market has already gained about 7,000 points since the middle of August and many investors and analysts have taken a view that a correction is due,' said Espina, who is also chairman of the Hong Kong Stockbrokers Association..
Matt McKeith, head of equity dealing at First State Investments, said hedge funds are partly to blame for the recent volatility on the local bourse.
'Without a shadow of a doubt some hedge funds might have deliberately pushed up the market as reflected by the high degree of speculative activity in the past few weeks,' he said.
'That the market lost more than 700 points today was no more than a situation in which both institutional and retail investors came to a view that they already have enough gains and it's time to lock in some profits,' he said.
McKeith said that while a correction is possible, the local market will still find support in the near term.
'I don't foresee any (big) sell-off anytime soon... not much has changed in Hong Kong's trading environment,' he said.
Fund inflows via China's qualified domestic institutional investor (QDII) program and other channels will continue supporting the local market, he said.
Eugene Law, head of research at Celestial Asia Securities Holdings, is of the view that that the local bourse may be headed for a major correction as early as next week.
'The turnover yesterday and today was unusually heavy and I believe this was due mainly to lots of QDII monies which have flowed into the local market while the mainland markets are closed for holidays this week,' he said.
'When trading in the mainland resumes next week, nobody knows if QDII monies now in Hong Kong will go back to the A-shares market where sharper gains can be made,' Law said.
'In the event of large amounts of money flows back to the mainland, this could cause sharp falls to the local market in the short term,' he added.
Large caps finished mostly lower, with China Mobile down 5.60 hkd or 4.14 pct to 129.80, Hutchison Whampoa down 2.55 hkd or 3.04 pct at 81.35 and Hong Kong Exchanges and Clearing falling 11.80 hkd or 4.79 pct to 234.80, while HSBC gained 3.70 hkd or 2.57 pct at 147.70. China financials also turned lower, wiping out earlier gains.
Bank of Communications was down 0.32 hkd or 3.14 pct at 9.86, China Life was down 1.90 hkd or 3.93 pct at 46.50, China Construction Bank down 0.02 hkd or 0.28 pct at 7.23 and Bank of China lost 0.09 hkd or 2.05 pct at 4.29.
Properties, which posted big gains yesterday on hopes for another cut in US interest rates, were also down, with the sectoral sub-index losing 1,920.56 points or 5.65 pct to 32,048.96.
Cheung Kong fell 7.40 hkd or 5.51 pct at 126.90, Sun Hung Kai Properties was down 11.90 hkd or 8.51 pct at 127.90, Sino Land shed 0.12 hkd or 0.61 pct at 19.64 and New World Development gave up 0.65 hkd or 2.95 pct at 21.35.
Henderson Land fell 2.25 hkd or 3.65 pct at 59.40 after announcing that it will acquire a 39 pct stake in Hong Kong and China Gas (Towngas), currently held by unit Henderson Investment.
Henderson Investment was up 1.08 hkd or 8.37 pct at 13.98, while Towngas gained 1.62 hkd or 8.95 pct at 19.72.
Among local banks, Hang Seng Bank gained 0.30 hkd or 0.21 pct at 143.20, Bank of East Asia was down 0.25 hkd or 0.58 pct at 43.15 and BOC Hong Kong fell 0.42 hkd or 2.10 pct at 19.58.
Retailers finished mixed after early gains triggered by robust August retail sales data released by the government yesterday.
Esprit Holdings was down 6.90 hkd or 5.43 pct at 120.10, Giordano gained 0.04 hkd or 1.05 pct at 3.85, Lifestyle International advanced 1.10 hkd or 5.02 pct to 23 and Bossini was down 0.005 hkd or 1.15 pct at 0.43.
Lifestyle International announced that it could take a 29.67 pct stake in EganaGoldpfeil (Holdings)following a deal to provide a 300 mln hkd bridge loan to the latter.
Elsewhere, China Unicom was down 0.34 hkd or 2.03 pct at 16.40 and Zijin Mining fell 1.06 hkd or 8.04 pct to 12.12, while Agile Property climbed 0.30 hkd or 1.76 pct to 17.30.
The Hang Seng China Enterprises Index finished down 656.34 points or 3.65 pct at 17,317.53, after moving in the range of 16,990.14 and 18,463.73.
(1 usd = 7.8 hkd)
ASX Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
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