HONG KONG, May 13: Hong Kong shares were knocked off a near three-month high on Monday as China’s biggest underwriter by revenue, Ping An Insurance, fell sharply after a three-month ban was imposed on its brokerage unit for helping list a fraudulent Chinese company.
Mainland China markets were also weaker, ahead of April data for urban investment, industrial output and retail sales in the world’s second-largest economy later in the day.
At midday, the Hang Seng Index was down 1 percent at 23,080.4 points after closing last Friday at its highest since mid-February. If losses hold, this is its worst daily loss since April 23.
The China Enterprises Index of the top Chinese listings in Hong Kong slid 1.7 percent. The CSI300 of the leading Shanghai and Shenzhen listings shed 0.3 percent, while the Shanghai Composite Index slipped 0.2 percent.
‘It’s definitely a negative and regulators are going to only increase their scrutiny on the brokerage sector, slowing things down even more and adding more uncertainty given the stalled IPO market in the mainland,’ said Jackson Wong, Tanrich Securities’ vice-president for equity sales.
The official China Securities Journal newspaper reported on Monday that the resumption of initial public offerings in China, which some had expected this month or next, will likely be delayed until the third quarter.
Ping An Insurance dived 3.1 percent in Hong Kong, heading for its worst day since Jan. 8 when it plummeted 4 percent. Its Shanghai listing shed a more modest 1.5 percent.
The China Securities Regulatory Commission (CSRC) said on Friday that Ping An Securities, a unit of Ping An Insurance will face a three-month ban from underwriting after it helped fraudulent firm Wanfu Biotechnology to list in 2011.
The unlisted Ping An Securities will also set up a 300 million yuan fund to compensate investors who lost money investing in Wanfu Biotechnology, the Securities Association of China said on its website on Friday.
Ping An Securities had been the most aggressive underwriter targeting small and medium-sized firms, as it took advantage of a boom in listings on China’s Nasdaq-style Chinext board, launched in the southern Chinese city of Shenzhen in 2009.
The Chinese brokerage sector was also among the losers on Monday. Citic Securities , the country’s largest-listed brokerage, skidded 3.2 percent in Hong Kong and 1.3 percent in Shanghai.
COMMODITIES WEAK
The growth-sensitive commodities-related sectors were also weak, tracking lower physical prices. Zijin Mining slipped 2.2 percent in Hong Kong and 1 percent in Shanghai as gold prices fell to a near two-week low.
CNOOC Ltd slid 2.6 percent in Hong Kong as Brent futures slipped towards $103 a barrel on Monday. If losses persist, this could be CNOOC’s worst daily loss since April 15.
Beijing is due to post April data for China’s urban investment, industrial output and retail sales later in the session.
Data last Friday showed Chinese banks lent 792.9 billion yuan ($129.3 billion) of new local currency loans in April, missing market expectations for 800 billion yuan and lower than 1.06 trillion yuan in March.
The broad M2 money supply jumped 16.1 percent in April from a year earlier, above a median forecast of 15.5 percent in a Reuters poll. The total social financing – a broad measure of liquidity in the economy, totalled 1.75 trillion yuan in April, down from 2.54 trillion in March.
(agencies)
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