November 6, 2017 / 5:08 AM / 2 years ago

Hong Kong stocks tumble as negative news triggers profit-taking; China calm

* SSEC -0.1 pct, CSI300 flat, HSI -0.6 pct

* Institutions prone to profit-taking toward year-end - trader

* Saudi Arabia anti-corruption campaign stirs money outflow fears

SHANGHAI, Nov 6 (Reuters) - Hong Kong stocks fell sharply on Monday 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 percent this year.

The benchmark Hang Seng index tumbled as much as 1.6 percent before recouping some losses to end the morning session down 0.6 percent at 28,436.67 points. The Hong Kong China Enterprises Index lost 1.1 percent, 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 manger 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 on Monday, with finance and property both falling 1 percent.


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 percent to 3,367.23 points.

An index tracking real estate shares tumbled more than 2 percent 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.

Reporting by Samuel Shen and John Ruwitch; Editing by Eric Meijer

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