HONG KONG, Aug 3: Hong Kong shares weakened below a key technical support level on Friday, in a general move away from riskier assets after inaction by the European Central Bank and Federal Reserve dashed investors’ hopes of easing.
The Hang Seng Index went into the afternoon session down 0.97 percent at 19,499.8, slipping under its 200-day moving average, now at 19,681, a technical support level it has struggled either side of since mid-May.
Mainland markets were steadier, however, helped by buying interest in property developers that followed domestic media reports that the housing ministry had denied rumours that more curbs would be placed on the sector. Speculation that fresh curbs were on the way had put markets in a spin on Thursday.
The CSI300 Index of the top Shanghai and Shenzhen listings was flat, down just 0.02 percent, while the Shanghai Composite Index was up 0.3 percent.
Neither showed much change on the week. Analysts said the lacklustre performance reflected uncertainty over the direction of China’s economy, as the government sought to turn the wheel on slowing growth.
‘Investors need to see signs of real fundamental change in the Chinese economy for them to come back into the market at this point,’ said Edward Huang, Haitong International Securities’ equity strategist.
On Friday, surveys showed China’s services sector expanded in July at a healthy clip, in contrast to a struggling manufacturing sector, although there were some signs of weakness in new orders and pressure from overcapacity.
The ECB’s failure to take any bold steps at its meeting on Thursday to address debt crises in the eurozone, followed the Fed’s decision to refrain from easing a day earlier, turning sentiment away from riskier assets.
Shares that led the way in a five day rally that ended on Thursday have been among the biggest losers.
Chinese oil major PetroChina shed 2.8 percent to its lowest in eight sessions.
Shares of Li & Fung, which manages supply chains for U.S. Retailers such as Wal-Mart Stores Inc and Target Corp, shed 2.7 percent after U.S. Manufacturers suffered an unexpected drop in orders in June.
Turnover at midday was d lackluster ahead of a key U.S. non-farm payrolls data for July due later in the day, that if underwhelming, coul boost hopes that the Fed will ease further as early as next month.
China Securities Regulatory Commission sought to bolster sentiment in equities markets on Thursday, by cutting transaction fees further and and encouraging companies to buy back their own stock.
PROPERTY DEVELOPERS REBOUND
Shares in Chinese property developers rebounded after media reports that the housing ministry had denied rumours that developers would be barred from selling homes before they are completed.
Ninety percent of developers’ residential properties in cities are sold this way, according to Deutsche Bank analysts said in a note to clients dated Aug. 2, and such a move would have led to a huge drop in supply and sharp rise in house prices, contrary to the government’s intentions.
Shanghai-listed Poly Real Estate rose 0.3 percent after suffering a 9 percent hammering on Thursday. In Hong Kong, China Resources Land rose 1.1 percent.
(AGENCIES)
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