China IPO fears numb stocks
6/12/09 Source: Thestandard.com
Investors turned cautious about China plays yesterday, as fears mounted that a renewal of initial public offerings in the mainland would soak up the liquidity in the market.
Hong Kong stocks bounced up and down in weak trading, ending slightly up as declines in local property plays were countered by gains in some financial stocks.
“The market still lacks a clear direction,” said Redford Securities head of research Kenny Tang Sing-hing. “The Hang Seng Index still needs more consolidation.”
The Hong Kong market spent much of the day in negative territory but racked up gains in the last hour of trading. The Hang Seng Index closed at 18,791.03 points, up 5.37 points or 0.03 percent.
The Shanghai Composite Index fell 18.92 points, or 0.7 percent, to close at 2,797.320 after the China Securities Regulatory Commission issued new guidelines on initial public offerings.
The new rules indicated the approval process would be revived after an unofficial freeze on flotations since September.
“In the short term, it will be an excuse for a correction,” said Sun Hung Kai Financial strategist Castor Pang Wai-sun.
In Hong Kong, shares worth HK$78.4 billion changed hands on the main board, down from HK$83.5 billion on Wednesday.
Hang Lung Properties (0101) plunged 4.8 percent to close at HK$25.55 on fears US interest rates will soon rise.
Henderson Land (0012) shed 2.7 percent to HK$45.55, while Cheung Kong (Holdings) (0001) fell 2.7 percent to HK$91.45.
“The turnover has not improved a lot, which indicates the momentum is not strong enough to break above the 19,000 level yet,” said Tang of Redford Securities.
The Hang Seng China Enterprises Index of H shares rose 47.29 points, or 0.4 percent, to close at 11,080.84.
China Construction Bank (0939), the day’s most active stock, rose 2.4 percent to HK$5.46 as shares worth HK$6.6 billion changed hands. Industrial and Commercial Bank of China (1398) rose 1.4 percent to HK$5.10.
