HONG KONG: Hong Kong shares slipped in a volatile trading session Wednesday on concern fueled by data showing a drop in China’s foreign-exchange reserves to a near six-year low, with energy producers sliding after a fall in oil prices.
The Hang Seng Index eased 0.1% to 23,310.29 by the noon break, recovering as much as 150 points from the session’s low. Trading turnover on the exchange’s main board was nearly HK$41 billion ($5.3 billion), larger than recent averages for the time of day. PetroChina, CNOOC and China Shenhua Energy sank at least 1% to weigh the benchmark gauge down as U.S. oil prices retreated 1.2% during Asian trading hours, adding to their 1.6% drop overnight, when they fell past a two-week low. Lending protection to the market were property developers on speculation positive views from brokerages, cheap valuations and an outlook for steady prices this year could help support their shares. China Resources Land surged 6.7% and China Overseas Land & Investment (COLI) added 5%.
The broad market decline came after official data released after the markets’ close on Tuesday showed China’s foreign reserves fell more than expected in January, sending their stockpile to just under the psychologically important $3 trillion level. The $12.3 billion drawdown last month, while smaller than in recent months, came amid sustained pressure from capital outflows. “One of the reasons for the weakness is investor concerns over the renminbi after a larger than anticipated fall in the reserves,” said Steven Leung, executive director for institutional sales at UOB-Kay Hian. “While brokerage upgrades are helping the rally in China developers, we see limited upside as the government will continue with efforts to rein in property prices.” Several Chinese cities had imposed curbs on home purchases and bank lending for the residential sector late last year to stem a surge in prices and deflate asset bubbles. The Shanghai Composite Index fell 0.3% and the Shenzhen Composite Index gave up 0.2%. The yuan was little changed at 6.8805 to a U.S. dollar in mainland trading after sliding Tuesday, while the offshore currency in Hong Kong weakened 0.1% to 6.8417.
The Nikkei Asia300 Index lost 0.5% to 1,103.80. Sands China and Galaxy Entertainment Group were the worst performers on the Hang Seng Index, dropping at least 1.7%. The two have fallen more than 8% so far this month amid a broader selloff in casino shares after January gaming revenues in Macau grew less than expected. China Evergrande Group and Sunac China Holdings rallied at least 4%, joining the wider rally by mainland real estate counters. Sunac late on Tuesday reported January sales of 8.12 billion yuan ($1.18 billion).
