HONG KONG: Hong Kong extended yesterday’s decline as the rout in mainland shares deepened amid speculation state intervention to prop up equities isn’t sustainable.
The Hang Seng China Enterprises Index dropped 0.5 percent to 11,173.04 at the close in Hong Kong, adding to Monday’s 3.8 percent loss. More than twice as many shares declined as those that advanced on the 40-member gauge. New China Life Insurance Co. fell 5.3 percent, while China Oilfield Services Ltd. slid 2.9 percent, leading declines on the H-share gauge.
“After this drop investors will even be more cautious because they are seeing whether the rescue package launched by the Chinese government is sustainable,” said Ronald Wan, chief executive at Partners Capital International in Hong Kong. “It’s very powerful to an extent but sustainability is still in question. Market sentiment now is very weak.”
The gauge of H shares had rebounded 8.1 percent in three days from a July 8 low as Chinese policy makers took unprecedented steps to end a $4 trillion stock slump. The sense of calm fostered by the measures was shattered Monday as the Shanghai Composite Index plunged 8.5 percent for its steepest fall in eight years. Tha mainland’s benchmark gauge added to losses Tuesday, falling 1.7 percent. Hong Kong’s Hang Seng Index gained 0.6 percent to 24,503.94.
China Eastern Airlines Corp. tumbled 4.4 percent as a $450 million investment from Delta Air Lines Inc. failed to support buying as the stock resumed trading. Great Wall Motor Co. climbed 1.8 percent after its preliminary first-half profit jumped.
