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Financials, steelmakers weigh Shanghai down
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HK bucks 5-day winning streak
HONG KONG/SHANGHAI: Hong Kong stocks snapped a five-day winning streak on Wednesday as shares of China Mobile tumbled after Vodafone sold its stake in the world's largest mobile carrier at a discount.
The benchmark Hang Seng Index fell 1.5 per cent to 21,088.9 points, pulling back from a one-month high. The China Enterprises Index fell 1.5 per cent.
Shanghai stocks slipped 0.1 per cent to 2,695.3 points, weighed down by weakness in financial and steel shares and fears that China's government may launch more measures to curb soaring property prices.
"There's no real axe to grind but just a little bearishness with a weak US market and the rising yen pushing Japan lower," said David Friedland, managing director for Asia Pacific at Interactive Brokers in Hong Kong.
The Hang Seng shed about a third of five per cent gains marked last week, on Wednesday, with China Mobile Ltd slumping 3.8 per cent and pulling other telecommunications counters lower. China Mobile has a nine per cent weighting in the Hang Seng index.
A term sheet showed that Vodafone Group Plc had sold its 3.2 per cent stake in the company for $6.5 billion. The price of HK$79.20 a share was a 3.4 per cent discount to Tuesday's close.
"News of such a big placement is going to affect appetites for the entire sector and telecom shares have had a very good run this year, so some profit-taking is reasonable," said Jackson Wong, a vice-president at Tanrich Securities in Hong Kong. China Unicom fell 4.2 per cent.
The sub-index of telecommunications companies is up nearly 10 per cent this year versus a 3.5 per cent drop for the Hang Seng, partly due to investors shifting funds into defensive sectors that are relatively less sensitive to government policy.
"After demand for small caps ebbed, investors are still not buying large caps. Worries about the economy and property measures are offsetting good earnings," Guo Yanling, analyst at Shanghai.
ICBC dropped one per cent after it said it would begin issuing 22 billion yuan ($3.2 billion) of bonds this Friday.
Property counters fell after the 21st Century Business Herald cited analysts as saying the government may launch more measures to cool surging home prices. Shanghai's sub property index fell 1.5 per cent, underperforming the broader market. Shandong-based Lushang Property Co Ltd fell 1.8 per cent, while Shanghai Xinmei Real Estate Co Ltd fell 2.2 per cent.
Steel shares sagged as investors took profits after a two-day rally. Guangzhou Iron and Steel fell 2.3 per cent. Baoshan Steel fell 1.3 per cent. -Reuters
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