SHANGHAI, Nov 6 — Hong Kong stocks fell sharply today morning as negative news flows at the weekend — including a corruption crackdown in Saudi Arabia and a call for tougher regulation in China — prompted profit-taking in a market that has surged roughly 30 per cent this year.
The benchmark Hang Seng index tumbled as much as 1.6 per cent before recouping some losses to end the morning session down 0.6 per cent at 28,436.67 points. The Hong Kong China Enterprises Index lost 1.1 per cent, to 11,472.16.
After sharp gains, “the market has become very sensitive toward the year end. Any whiff of bad news could trigger intensive selling,” said Linus Yip, strategist at First Shanghai Securities.
The anti-corruption campaign in Saudi Arabia — which has ensnared princes, top officials and businessmen — stirred concerns of Middle East money pulling out of the Hong Kong market, Yip said.
He also pointed to a call at the weekend for tougher financial regulation by China central bank governor Zhou Xiaochuan, which helped deepen fears of economic slowdown in China.
A fund manager for Chinese insurer PICC said that “toward the year end, institutional investors are prone to lock in profit,” adding he has already reduced the Hong Kong stocks in his portfolio.
However, a correction did not necessarily represent a reversal of the uptrend, he said, as lower share prices could create bargain-hunting opportunities for mainland investors still interested in Hong Kong stocks.
Most sectors fell today, with finance and property both falling 1 per cent.
China’s stock market, which is less sensitive to global capital flows, was calmer. The CSI300 index was unchanged at 3,991.14 points at the end of the morning session, while the Shanghai Composite Index lost 0.1 per cent to 3,367.23 points.
An index tracking real estate shares tumbled more than 2 per cent on news that Beijing had tightened controls on down payments for home buyers and had created a new loan product aimed at renters to promote the rental housing market, the People’s Daily said. — Reuters