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CORRECTED-HK, China shares weaker, HSBC at lowest since May 2009
November 25, 2011 / 5:31 AM / 6 years ago

CORRECTED-HK, China shares weaker, HSBC at lowest since May 2009

3 Min Read

(Corrects HSBC milestone in headline)

* HSI down 1.3 pct, set for 4th straight weekly loss

* Shanghai Composite down 0.4 pct, set for 3rd weekly loss

* Low HK turnover likely to persist to yr-end -strategist

By Clement Tan

HONG KONG, Nov 25 (Reuters) - Hong Kong shares fell on Friday, poised to post a fourth straight weekly loss as investors cut risk ahead of the weekend, with the benchmark Hang Seng Index struggling to hold at chart support levels.

Market watchers said foreign investors, particularly European funds, were likely to take further profit in the run-up to year-end, keeping turnover weak with risk aversion staying high in global markets as funding fears spike in Europe.

"Investors are looking at oversold consumer stocks and shares of companies that provide current income such as power companies and expressway builders," said Peter So, a strategist with CCB International Securities in Hong Kong. "But sustainable dividend growth is not the only consideration with investors looking to position themselves for when the global situation stabilises."

The Hang Seng Index was down 1.29 percent at 17,704.54 at the midday trading break. The benchmark struggled all morning before finishing below the 61.8 percent retracement of its rise from the Oct. 4 low to Oct. 28 high, at about 17,735 points.

If this support is broken at the end of trading on Friday, chart support is next seen between 17,179 and 17,437, the high on Oct. 6 and low on Oct. 7, respectively.

HSBC Holdings Plc, Europe's largest bank, slumped to its lowest level since May 2009 and with a 15 percent weighting was a big part of the Hang Seng Index's slide.

The gridlock in Europe over the region's debt problems has hit the bank hard. It is down almost 20 percent in November so far, poised for its worst month in more than three years and driving its 12-month forward earnings multiples to the lowest in at least the last 15 years, according to Thomson Reuters Starmine data. At 7.3 times, it is 4.3 percent off its historical low.

Weekly Turnover in Shanghai Lowest in 7 Weeks

The Shanghai Composite Index was 0.4 percent lower at 2,388.9 points at midday, poised for a third straight weekly loss in the lowest A-share weekly turnover seen in the last seven weeks.

Financials were the standout underperformers after strength in the sector, along with property developers helped the Shanghai benchmark snap a six-day losing streak on Thursday.

In all, six financial stocks figured among the top 10 drags with the mainland's biggest bank by market capitalisation, Industrial and Commercial Bank of China Ltd (ICBC) the top drag, down 1.4 percent.

Resources-related stocks also suffered on lingering growth concerns, with top coal producer China Shenhua Energy Co Ltd down 0.6 percent. Local media also reported that thermal coal prices could be capped. (Editing by Chris Lewis)

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