HONG KONG SHARES SET TO SNAP WINNING STREAK, CHINA INCHES DOWN
DATE: 30/05/2012
HONG KONG: Hong Kong and China shares fell on Wednesday,
dragged lower by sectors most sensitive to the Chinese economy after media
reports dampened expectations that Beijing is considering another massive
stimulus programme.
While China has
recently offered small-scale incentives to support certain sectors of the
economy, an article on the website of the official Xinhua news agency said that
Beijing has no plan to repeat the powerful stimulus used to combat the global
credit crisis in 2008, which amounted to some 4 trillion yuan ($630 billion).
Worries over Europe's
debt crisis also continued to hurt sentiment, with Spain in focus on fears that
efforts to recapilise its ailing banks will add to pressure on its finances.
HSBC Holdings Plc, the region's largest bank, slumped 2 percent.
The Hang Seng Index
ended the morning session down 1.9 percent, looking set to snap a three-day
winning streak. It slipped below the 50 percent Fibonacci retracement of its
rise from October 2011 lows to February 2012 highs, at about 18,966 points.
On the mainland, the
large cap-focused CSI300 and the Shanghai Composite Index each slipped 0.1
percent, with Chinese energy, resources, infrastructure and banking plays all
weaker.
Midday bourse turnover
in Hong Kong was at its highest in a week, while trading volume in Shanghai
stayed fairly robust depite declining from Tuesday.
Several market sources
cited a Xinhua report released after markets closed on Tuesday that said China
had no plans for economic stimulus measures this year that are on the scale of
those seen in the 2008-2009.
"I don't think we
need to be so cynical. Beijing will definitely have to continue to make
adjustments, but it won't change its top line rhetoric," said Hong Hao,
Bank of Communications International's chief equity strategist.
In Hong Kong, the
country's top two lenders, China Construction Bank and Industrial and
Commercial Bank of China shed 1.7 and 1.9 percent, respectively, and were among
the top drags on the Hang Seng benchmark.
Chinese railway
companies, which have surged since Beijing recently announced measures intended
to bolster the debt-ridden and scandal-plagued sector, were among the top
percentage losers.
China Rail
Construction slumped 3.6 percent, and was the top drag on the China Enterprises
Index of the top Chinese listings in Hong Kong, which was down 1.9 percent.
Before Wednesday,
China Rail Construction had jumped 13.4 percent in the last seven trading
sessions. It is still up 43 percent this year, after plunging 54 percent last
year, 6 percent in 2010 and 14 percent in 2009.
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