Hong Kong Index

HK Shares End Down as Shanghai Disappoints After Holiday

HONK KONG--Hong Kong shares ended lower Monday as investors were disappointed by a decline in China stocks after a weeklong holiday on the mainland.
The blue-chip Hang Seng Index fell 187.82 points, or 0.9%, to 20,824.56. Market volume totaled 43.39 billion Hong Kong dollars (US$5.60 billion), down from HK$45.26 billion Friday.
Investors were anticipating that China stocks would rise when A-shares started changing hands again Monday, with the A50 China Tracker, a proxy for Shanghai- and Shenzhen-traded A-shares, up 1.1% last week, said UOB KayHian director of institutional sales Steven Leung. But the Shanghai Composite Index ended down 0.6% at 2,074.42 as investors remained concerned about a slowing domestic economy.
Still, Hong Kong stocks were riding a five-week 7.9% gain and a five-day 2.4% winning streak, and Monday's retreat may have been due to routine profit-taking.
"At the start of October, there may be some profit-taking pressure given that we've had a good run in September," said Ben Kong, chief operating officer at KGI Asia. Mr. Kwong didn't expect any correction to go far, and pegged 20,500-21,500 as the short-term trading band for the HSI.
"Toward the end of the month, investors will be eyeing the U.S. presidential elections and China's Party Congress. I think both events will be supportive factors to the markets," he said.
Mainland property stocks led the blue chips' declines, as property sales in so-called Golden September, a traditional peak season for property sales, didn't turn out to be so robust. Credit Suisse said in a note that after September's weaker-than-expected housing sales, October's sales may disappoint as well.
China Overseas Land dropped 3.0% to HK$19.20 and China Resources Land slid 3.4% to HK$16.56.
Hong Kong property stocks succumbed to profit-taking after their recent gains. Henderson Land fell 2.0% to HK$55.30 and New World Development was down 2.7% at HK$12.44.
Still, amid the general pessimism toward the Chinese economy, one industrial stock's upsurge could indicate better times ahead. Kingboard Chemical rose 7.0% to HK$22.15 and is up 19.0% in the past four sessions, underpinned by a slew of brokerage upgrades.
Kingboard operates two main businesses: laminates and chemicals, and "has been a reliable leading indicator on Chinese end-demand," according to Credit Suisse. The house said Kingboard's potential business trough in the third quarter may indicate stabilizing or improving demand in the fourth quarter or the first quarter of 2013.