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HK stocks end lower in slowest trade this year

HONG KONG: Hong Kong stocks fell on Monday as investors shunned the local market in the quietest day of trading this year and ignored the Nasdaq's strong finish on Friday.

The benchmark Hang Seng Index fell 0.54 percent or 90.94 points to 16,850.74, following a 2.73 percent rise on Friday.

Turnover at HK$9.3 billion was the lowest this year, according to the Hong Kong stock exchange, and about half of the daily average of HK$18.1 billion for the past three months. "There's no action here, investors are very cautious and they are trying to second-guess the US market," said Michael Liang, vice president of Asian equities at Daiwa Securities. "Trade is very, very thin."

While Mondays are typically quiet, with little participation from US buyers, the Hong Kong market also suffered from an outflow of funds, analysts said.

The Hong Kong Monetary Authority (HKMA) reported a HK$2.258 billion outflow in the aggregate balance of banks' Hong Kong dollar clearing accounts at the HKMA due to foreign exchange transactions to be settled on Tuesday.

The strong demand for US dollars might be the result of some foreign houses adjusting their stock portfolio, a dealer said.

"With the big money outflow there's not much buying interest," said Kitty Chan, fund manager at APC Investment Management Services Co Ltd. "Third and fourth liners are under pressure."

High-technology stocks that climbed out of the technology rout last week were exposed to selling on Monday as investors saw an opportunity to take profit, seemingly ignoring a 4.19-percent rise in the Nasdaq on Friday. "We need buyers," said Liang. "After the Nasdaq went up for three days in a row, investors don't think it will go up another day. Nobody knows where it's going to go and there's no local news."

China's mobile operator China Telecom (Hong Kong) Ltd trimmed its 15.5-percent rally over the last two trading days, shedding 2.2 percent or HK$1.50 to HK$67.75.

China's largest personal computer maker Legend Holdings Ltd which soared 35.8 percent at the end of last week, dropped 4.7 percent or HK$0.60 to HK$12.05, taking the red chip index down with it.

Internet company Pacific Century CyberWorks (PCCW) lost 3.7 percent or HK$0.60 to HK$15.75, while the company it is due to merge with, Cable & Wireless, dropped 1.9 percent or HK$0.35 to HK$18.60.

Blue chip Television Broadcasts Ltd dropped 2.8 percent or HK$1.75 to HK$60.25.

Internet stocks that have surged on "momentum buying" suffered from the market's quiet phase, analysts said.

Hong Kong's high-tech GEM index, which lost 25 percent at the beginning of last week when it was caught up in the tech turmoil, sank lower on Monday, down 3.26 percent at 721.19. Blue chip banks were not exempt from the sell-off on Monday amid nervousness over further rate hikes when the US Federal Reserve meets on May 16.

Hong Kong's largest bank, HSBC Holdings Plc fell HK$0.75 to HK$86.50. Dao Heng Bank sank 2.7 percent or HK$1.00 to HK$35.60.

Bucking the tech and bank slide, Hong Kong conglomerate Hutchison Whampoa Ltd gained 1.5 percent or HK$2.00 to HK$136.00 while its parent Cheung Kong (Holdings) Ltd jumped HK$0.50 to HK$107.50.

Cheung Kong said late on Monday its subsidiary Hong Kong Property Services (Agency) Holdings Ltd would merge with Midland Realty (Holdings) Ltd, forming Hong Kong's largest real estate agency group.

While Chinese television maker Skyworth Digital Holdings Ltd was in positive territory for most of Monday, it ended the day 7.0 percent lower at HK$2.65, after closing HK$0.78 above its issue price of HK$2.07 on Friday.

Looking ahead, analysts said trade was likely to remain quiet ahead of the Easter holiday next week and the outlook for technology stocks remained cautious.

"I think we will continue drifting down from here in tight-range trading," said Liang.-Reuters