HONG KONG, Sept 25: Hong Kong shares slipped on renewed concerns over global growth, and after China’s central bank dampened expectations of a cut in banks’ reserve requirements by injecting a record amount of funds into the market on Tuesday.
The Hang Seng index dropped 0.1 percent to 20,669.2 by the midday trading break after opening flat while the index of top Chinese shares listed in Hong Kong was 0.5 percent lower.
In China, the CSI300 of the top Shanghai and Shenzen listings as well as the Shanghai Composite lost 0.3 percent each.
Investors in China, poised to suffer a third straight year of losses in the domestic stock markets, have been disappointed as Beijing has held back from more direct measures to tackle slowing growth such as cutting interest rates or reducing the amount of cash banks need to keep with the central bank.
Earlier on Tuesday, the People’s Bank of China (PBOC) said it would inject 290 billion yuan ($45.96 billion) into the banking system through reverse bond repurchase agreements.
‘The PBOC’s reverse repos today have dampened expectations for any immiment RRR cuts,’ said a Hong Kong-based trader at a Chinese brokerage.
A surprise drop in German business sentiment as well a weak forecast from industrial bellwhether Caterpillar Inc had kept Asian markets on the backfoot giving investors little reason to chase this month’s rally in Hong Kong.
The Hang Seng index is up 6.1 percent this month led by cyclical sectors such as transportation, machinery and mining as investors returned to sectors beaten down on worries over China’s slowing economy.
UNDERWEIGHT
Railway equipment stocks fell on Tuesday after brokerage Credit Suisse rated the sector as ‘underweight’ as it expects delayed orders and funding constraints to lead to more cuts in earnings forecasts.
China Railway Construction fell 2.8 percent and China Communications Construction was down 2.6 percent. China CNR Corp fell 0.9 percent.
Weakness in railway stocks spread to shippers and port operators with China Shipping Development down 4.3 percent. It was the biggest loser among top Chinese shares listed in Hong Kong.
A pullback in gold prices to a 1-1/2 week low overnight weighed on mining firms with top Chinese producer Zijin Mining down 3.2 percent and rival Shandong Gold off 2.6 percent.
The heavyweight financials sector was a drag on Hong Kong and Chinese indices.
Hong Kong Exchanges & Clearing (HKEx), the world’s no.2 exchange operator by market value, fell 2.6 percent on relatively high volumes after the company said it would raise $500 million via convertible bonds for its proposed acquisition of the London Metals Exchange.
HKEx, which still derives the majority of its income from trading commissions, has suffered as trading activity in Hong Kong has remained stubbornly low through the year.
Daily turnover in Hong Kong averages just over HK$50 billion ($6.45 billion) currently compared with around HK$70 billion ($9.03 billion) the same time last year. ($1 = 7.7525 Hong Kong dollars)
(agencies)
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