HONG KONG, Aug 15: Hong Kong shares fell on Wednesday, after closing at a three-month high the previous day, on worries of lower corporate earnings, but Standard Chartered advanced after reaching a settlement with U.S. authorities over transactions linked to Iran.
At midday, the Hang Seng Index was down 1.3 percent after flattening at chart resistance of about 20,300, but remained in the same 240-point range in which it has moved for the last seven sessions. Chart support is seen at 19,966, the low recorded on Aug. 8.
Investors are watching the ongoing earnings season for concrete signs of the impact the slowdown is having on Chinese companies, particularly since underwhelming data last week had dampened expectations of an imminent earnings recovery.
‘Yes, expectations may be very pessimistic, but there are still no signs that things will improve from here. There has been a lot of talk about policy support, but not a lot of details,’ said Edward Huang, an equity strategist with Haitong International Securities.
Chinese Internet giant Tencent Holdings lost 2.2 percent as investors took profits ahead of its first half corporate earnings report later in the day.
Standard Chartered Plc bucked broader market weakness, jumping 5.6 percent after the British-based bank reached a $340 million settlement with New York’s bank regulator over transactions linked to Iran.
In a suggestion that pessimism could be overdone, Anhui Conch Cement saw mild gains after posting a 51 percent decline in first half net profit—which was a better result than the loss the company had warned about earlier.
Its Hong Kong shares gained 0.3 percent, while rising 0.6 percent in Shanghai. Anhui is still down more than 12 percent in Hong Kong and almost 9 percent in Shanghai, both underperforming benchmark indices in their respective markets.
Goldman Sachs analysts advised clients to buy into Anhui’s shares because they expect cement prices to be the first to rebound in the fourth quarter when the low summer season ends and construction activity picks up.
Despite Wednesday’s losses, Tencent is still up more than 44 percent on the year, as investors opt for its earnings visibility that some analysts have touted as being resilient to the slowdown in China’s economy.
Before Wednesday, Tencent was trading at 23 times forward 12-month earnings, a 15 percent discount to its historical median, according to Thomson Reuters StarMine.
In the last 30 days, eight of 34 analysts have upgraded their full year earnings estimates for the company by an average of 1.7 percent, according to StarMine.
ONSHORE CHINESE MARKETS WEAKER TOO
Mainland Chinese markets were also weaker, paring last week’s gains as benchmark indices creep back towards lows seen in late July and earlier this month, with sagging bourse volume showing no signs of improvement.
The Shanghai Composite Index shed 0.8 percent, while the CSI300 Index of the top Shanghai and Shenzhen listings dropped 0.9 percent, with energy majors and banks among their biggest drags.
PetroChina slipped 0.5 percent, while the country’s biggest coal producer China Shenhua Energy Co Ltd shed 1.1 percent as spot coking coal prices decline and Chinese coal producers struggle with oversupply.
China, the world’s top coal producer and consumer, has set its 2012 coal production target at 3.65 billion tonnes and forecast lower output at its top three coal producing regions, according to a statement by the National Development and Reform Commission (NDRC).
Chinese port investor and operator China Merchants Holdings (International) Co Ltd said on Wednesday that its Shenzhen-listed China International Marine Containers (Group) Co Ltd plans to change the listing venue of its B shares to Hong Kong by way of introduction without raising fresh capital.
This is the first company to migrate to the Hong Kong bourse, as mainland regulators encourage companies to delist from China’s ailing B-share board.
(AGENCIES)
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