Hong Kong shares capped by chart resistance; China slips
(Updates to close)
* HSI up 0.5 pct, CSI300 down 0.2 pct
* HSI struggles at 200-day MA for second time this week
* Macau gaming sector strong, Galaxy outperforms
* China Unicom slips after May 3G growth underwhelms
By Clement Tan
June 20 (Reuters) - Hong Kong's benchmark index closed at a one-month high on Wednesday on optimism that the U.S. central bank could launch a new round of monetary stimulus, although strong technical resistance capped gains for a second day this week.
HSBC Holdings Plc was the top boost to the Hang Seng Index, which rose 0.5 percent to 19,518.85, its highest since May 15. Gains were thwarted by its 200-day moving average, currently at about 19,591, a level that also limited gains on Monday.
Mainland Chinese markets slipped for a second-straight day. The Shanghai Composite Index declined 0.3 percent, while large cap-focused CSI300 Index closed down 0.2 percent, moving further below its 100-day moving average.
Trading interest remained lackluster with turnover in Hong Kong declining for a third day and approaching the year's lows in Shanghai.
Investors were cautious ahead of China's June HSBC flash PMI, expected early on Thursday, the earliest indicator of manufacturing activity in the world's second-largest economy. A weaker than expected PMI number could indicate that China's economic slowdown may persist into the next quarter.
Still, there was some optimism in the market ahead of the outcome of the U.S. Federal Reserve's policy meeting.
The Fed could announce later on Wednesday an extension to its long-term bond-buying by a few months from its planned end later in June, a move that could inject liquidity into the more globally exposed Hong Kong market.
"I don't think money has left Hong Kong. Investors have been sitting on cash," said Peter So, CCB International Securities' Hong Kong-based co-head of research.
"We are more confident on China, given the uncertainty elsewhere in the world. We favour Chinese developers, insurance, brokerages and consumer staples, but would probably avoid shippers and exporters," he added.
But on Wednesday, Chinese developers and brokerages, among the best performers this year, were mostly weaker in both Hong Kong and mainland Chinese markets as investors took some profits.
China Overseas Land & Investment Ltd suffered a second-straight loss, slipping 1.8 percent. It is still up more than 32 percent this year. Haitong Securities shed 0.7 percent in Hong Kong and 1.7 percent in Shanghai
The Macau gaming sector was strong. The newest Hang Seng Index component, Sands China rose 3,3 percent, while Galaxy Entertainment jumped 6.6 percent and Wynn Macau gained 5 percent.
CHINA UNICOM TUMBLES TO TWO-WEEK LOW
China Unicom tumbled 3.9 percent to HK$10.40 in Hong Kong, its lowest since June 8 after the mainland's second-largest telecom provider posted late on Tuesday May 3G subscriber growth that disappointed expectations.
Unicom's smaller peer, China Telecom was also weak, shedding 2.5 percent, but its larger rival, China Mobile inched up 0.2 percent. China Mobile is the only one among the three in positive territory for the year.
In a note to clients on Wednesday, Bank of America-Merrill Lynch analysts slashed their 2012 profit estimates for Unicom by 18 percent and cut its price target for Unicom's Hong Kong listing to HK$16.20 from HK$19, while maintaining a "buy" rating.
"As the economy is slowing and there is no mobile number portability in China, we think the 'tipping point' of mass market adoption of 3G is being delayed and consumer spending on mobile data is slowing as well," BofA-ML analysts led by Sydney Zhang said in the same note.
China Unicom is down 36 percent so far in 2012 after surging 47 percent last year as investors flocked to the perceived safety of its earnings growth, primarily driven by its 3G business.
Of the three Chinese telcos, China Mobile, up 9 percent this year, is the only one trading at a discounted forward 12-month earnings multiple. At 10.4 times, it is trading at a 12 percent discount to its historical median, according to Thomson Reuters StarMine.
Unicom is currently trading at 24.6 times, 20 percent more than its historical median, while China Telecom is trading at 13.9 times, 12.2 percent more than its historical median. (Editing by Ramya Venugopal)
- Tweet this
- Share this
- Digg this