Hong Kong shares lower on China data caution resources slump

Share prices were lower despite a rebound on Wall Street, as investors were worried that China may report weak economic data for the third quarter, dealers said.

China will release third-quarter gross domestic product (GDP) and other data on Monday.

The market was also pressured by further falls in metals and resources stocks as commodity prices slumped again overnight on global recession fears.

China Merchants Holdings outperformed, gaining more than 6 pct after a broker named mainland's largest port operator as its top pick among Chinese conglomerates.

At 11:05 am, the Hang Seng index was down 255.27 points or 1.68 pct at 14,975.28, off a low of 14,947.69 and high of 15,261.52.

Turnover was 14.75 bln hkd.

'Despite gains on Wall Street last night, sentiment in our market was dragged down by two major factors,' said Linus Yip, strategist at First Shanghai Securities.

'The first is doubts if those gains are sustainable near-term as the US economy faces prospects of slipping into a recession,' he said.

'Investors are also worried that China will report further slowdown in economic growth for the third quarter after reporting slower growth in the second quarter,' he said.

'There are fears out there that China's GDP growth will fall below 10 pct in the third quarter,' Yip said.

Overnight, the Dow Jones Industrial Average rose 401.35 points or 4.68 pct to 8,979.26 in a volatile session following mixed economic data.

Industrial production in the US fell 2.8 pct in September, the steepest drop in almost in 34 years, but the news was counter-balanced by a flat reading on consumer price index and better-than-expected jobless cliams figures.

Yip said many investors opted for the sidelines ahead of China's economic data.

'Many chose to take a cautious stance ahead of the release of the data and the weekend also gave them a good excuse not to take strong trading positions,' he said.

'With global recession fears still weighing on sentiment and caution ahead of China data, it's difficult to predict if we will end today's trade with gains or losses,' he said.

Among large-caps, China Mobile slipped 0.40 hkd or 0.57 pct to 69.40, HSBC fell 2.0 hkd or 1.84 pct to 106.50, Hong Kong Exchanges and Clearing down 1.60 hkd or 1.88 pct at 83.40 and China Life down 0.05 hkd or 0.21 pct at 23.90.

China financials were lower, with ICBC gaining 0.04 hkd or 1.05 pct at 3.85, Bank of Communications down 0.08 hkd or 1.4 pct at 5.62, China Construction Bank down 0.09 hkd or 2.13 pct at 3.67 and Bank of China down 0.02 hkd or 0.78 pct at 2.56.

China Merchants Bank (CMB) was down 0.24 hkd or 1.67 pct at 15.34, extending yesterday's 7.69 pct fall after flagging down slower earnings for the nine months to September compared to its first quarter and first-half.

'Investors remain worried about slowing earnings in the China banking sector after CMB's profit guidance. Further hurting sentiment towards this sector are worries that foreign strategic investors might sell their stakes in some of the largest banks,' said Yip.

PICC was up 0.06 hkd or 2.39 pct at 2.57 following news that it has taken a 32.35 pct stake in China Credit Trust, making the insurer the mainland's second largest insurance group after China Life.

Local banks were mostly lower, with Bank of East Asia down 0.35 hkd or 1.69 pct at 20.40, Hang Seng Bank up 0.80 hkd or 0.74 pct to 109.30 and BOC Hong Kong down 0.26 hkd or 2.22 pct at 11.44.

Fubon Bank (Hong Kong) was up 0.04 hkd or 1.8 pct to 2.26 following news that it is raising fresh capital by issuing shares that will be subscribed by its Taiwanese parent.

Metals and resources stocks continued their slide as commodity prices continued to tumble on fears of reduced demand amid a global recession.

Chalco fell 0.20 hkd or 6.06 pct at 3.10, Angang Steel down 0.24 hkd or 5.26 pct at 4.32, Jiangxi Copper down 0.24 hkd or 4.9 pct at 4.66 and Zijin MIning down 0.07 hkd or 2.5 pct at 2.73.

Oil stocks were mostly lower, with PetroChina losing 0.27 hkd or 4.29 pct at 6.03, China Petroleum and Chemical Corp (Sinopec) up 0.09 hkd or 1.91 pct at 5.33 and CNOOC lost 0.22 hkd or 3.59 pct at 5.90.

Crude oil for November delivery shed 4.69 usd or 6.3 pct to 69.85 usd a barrel in New York last night.

Exporters and shipping firms staged a technical rebound following yesterday's steep losses on fears that both sectors will be hit by global recession.

Among exporters, Li & Fung gained 0.20 hkd or 1.31 pct at 15.50, handset maker Foxconn was flat at 3.11 hkd and Yue Yuen Industrial up 0.02 hkd or 0.13 pct at 15.74.

In the shipping sector, China COSCO rose 0.06 hkd or 1.56 pct to 4.57, Pacific Basin gained 0.10 hkd or 2.14 pct at 4.77, Sinotrans Shipping was up 0.04 hkd or 3.03 pct at 1.36 and China Shipping Development gained 0.13 hkd or 2.21 pct at 6.02 after recent falls.

Properties were mostly higher, with Cheung Kong up 0.55 hkd or 0.73 pct at 75.55, Henderson Land up 0.30 hkd or 1.11 pct at 27.40 and Sun Hung Kai down 0.85 hkd or 1.33 pct at 66.90.

Air China was down 0.09 hkd or 3.23 pct at 2.70 after Citigroup maintained a 'sell' recommendation and 3.4 hkd price target on the airline.

China Merchants Holding was up 1.22 hkd or 6.33 pct at 20.50 after Merrill Lynch named the stock as its top pick among Chinese conglomerates.

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Hong Kong shares lower on China data caution resources slump