HK shares seen lower on oil price, China market
HONG KONG, July 2 (Reuters) - Hong Kong shares are expected to start the second half of 2008 on a low note, with investors reacting to the previous session's sharp pullback in mainland markets and the steep run-up in crude oil prices.
The Shanghai Composite Index .SSEC sank more than 3 percent on Tuesday to a fresh 16-month closing low on worries about rising interest rates and heavy supplies of shares from impending initial public offerings (IPOs).
Hong Kong's market .HSI was closed on Tuesday for the anniversary of the territory's handover to China from Britain.
The benchmark Hang Seng Index .HSI closed Monday 0.3 percent higher at 22,102.01 points, but finished down 20.5 percent in the January-June period, marking its worst half-year performance in 14 years
"There is only one way to go today, further down. Except oil and gold stocks all other counters should fall with H-shares leading losses," said Francis Lun, general manager with Fulbright Securities.
Crude oil prices topped $143 per barrel overnight before easing to a record settlement price amid supply concerns stirred by rising tension between Israel and OPEC member Iran. [nN01298663]
U.S. stocks rose on Tuesday, after embattled automaker GM GM.N surprised Wall Street with stronger-than-expected June sales, overshadowing concerns about record oil prices.
The modestly positive start to the third quarter followed the Dow Jones industrial average's worst first six months since 1970. [nN01303604]
STOCKS TO WATCH
*Resources stocks will be in focus with crude oil closing at a record high on Tuesday. Refiners and airlines are expected to take a beating with surging oil prices seen eroding their profitability.
Gold miners are likely to rally after the precious metal ended near a 10-week high as rising oil prices fuelled buying of gold as an inflation hedge. [nL01624500] Zijin Mining (2899.HK) surged 6.8 percent on Monday on higher gold prices.
* Shares in Chinese airlines may find respite from Tuesday's up to 50 percent increase in jet fuel surcharge which will help offset pressure from high oil prices. [ID:nSHA264466]
* Guangzhou Shipyard (0317.HK) said on Tuesday it plans to buy small to mid-sized ships builder, Guangzhou Wenchong Shipbuilding Ltd, from its parent for not more than 3.1 billion yuan ($452.1 million). The purchase will be funded by a rights issue on the basis of three for every 10 existing shares. here *Sinotrans Shipping Ltd (0368.HK) said it will buy two new ships to be delivered in late 2009 for a total of US$194 million. The acquisition will lift its market share in the import of iron ores into China. here ---------------------MARKET SNAPSHOT@23:05GMT ------------------
INSTRUMENT LAST PCT CHG NET CHG S&P 500 .SPX 1,284.91 0.38% 4.910 USD/JPY JPY= 106.04 -0% 0.000 10-YR US TSY YLD US10YT=RR 4.008 -- 0.000 SPOT GOLD XAU= $939.15 0.03% 0.300 US CRUDE CLc1 $141.63 0.47% 0.650 DOW JONES .DJI 11382.26 0.28% 32.25 ASIA ADRS .BKAS 148.51 -1.01% -1.52 --------------------------------------------------------------- > US STOCKS-GM's sales surprise lifts Wall Street [.N] > Oil rises on supply worries, Iran tensions [O/R] > Dollar falls against euro as ECB decision approaches[USD/] > TREASURIES-Bonds slip as U.S. stocks clamber back [US/] > Gold ends up on inflation fear, near 10-year high [GOL/] > SEA STOCKS-Mainly lower on growth worries;Indonesia gains [.SO] (Reporting by Parvathy Ullatil; Editing by Keiron Henderson)
