Hong Kong stocks reversed opening gains to end 2.26 percent lower on Friday on mounting selling pressure on China Mobile after it was rumored that an investor attempted to sell off millions of shares in the heavyweight.
China Mobile was obviously the target of negative comments as institutions slashed the target prices for, or downgraded, shares of the mainland mobile operator. It slumped 3.6 HK dollars, or 5.4 percent, to close at 63.1 HK dollars.
The benchmark Hang Seng Index even opened 0.21 percent higher at 13,157.9 but quickly reversed gains to losses thereafter. By lunch break it was below the 13,000 mark at 12,923.07, down 207.85 points, or 1.58 percent from the previous close.
The blue chip index moved between 12,797.10 and 13,157.9 before closing at 12,833.51. Market turnover totaled 43.89 billion HK dollars (5.63 billion U.S. dollars), down from Thursday's 48.59 billion HK dollars (6.23 billion U.S. dollars).
The HSI futures were trading at a discount of 45 points, suggesting potential downside pressure after the recent rebound that spanned a week, whereas the China Enterprises Index futures were trading at a premium of 35 points.
Full-day shorting totaled 2.62 billion HK dollars (336 million U.S. dollars), or about 6 percent of the market turnover. China Mobile led the shorting list by contributing 7.3 percent of the shorting, followed by Li&Fung and HSBC.
The mainland-based banks were also losers as investors turned cautious of the industry prospects on concerns of further weakening economic fundamentals.
Bank of Communications, one of the state-owned commercial banking giants, closed down 0.28 HK dollars, or 5.42 percent, at 4. 89 HK dollars, and Bank of China lost 4.22 percent at 2.27 HK dollars, while ICBC tumbled 5.43 percent.
China Construction Bank also went down 5.24 percent to 4.16 HK dollars.
HSBC edged down 0.05 HK dollars to end at 41.45 HK dollars after shareholders approved its multi-billion U.S. dollar rights issue overnight in London. The rights will be on the Hong Kong stock market for trading starting from Monday.
The finance sub-index lost 510.96 points, or 2.74 percent, making it the biggest loser among the four major stock categories.
Local banking players Hang Seng Bank and Bank of East Asia were down 3.06 percent and 1 percent, respectively, while mainland insurance players China Life and Ping An respectively shed 2.2 percent and 3.93 percent.
Cheung Kong, the conglomerate headed by Hong Kong's richest man Li Ka-shing, also tumbled 3.51 percent at 63.15 HK dollars, while SHK Properties, the leading residential developer in Hong Kong, was down 2.11 percent at 64.9 HK dollars.
The properties sub-index was down 2.53 percent, the utilities category was down 0.56 percent while the commerce and industry genre shed 1.83 percent.
Resources shares bucked the trend to record strong gains as investors bet on a surge in gold prices after the United States Federal Reserve said that it planned to inject U.S. dollars numbered in trillions into the economic system.
The energy shares end mixed on a surge in oil price. PetroChina and Sinopec, both with large refining operations, closed down 1.48 percent and 3.5 percent, respectively, whereas the offshore oil producer CNOOC gained 1.21 percent at 7.53 HK dollars.
It was also the last day that closing auctions were allowed after a drastic tumble in the share price of HSBC two weeks ago prompted the Hong Kong stock exchange operator to suspend the mechanism that has drawn much criticism.
Share price of HKEx, the sole stock exchange operator in Hong Kong, shed 2.9 HK dollars, or 4.27 percent, to close at 65 HK dollars after the recent rally. (7.8 HK dollars = 1 U.S. dollar)
(Xinhua News Agency March 20, 2009)
