November 5, 2018 / 8:54 AM / 14 days ago

Hong Kong stocks lower as investors watch U.S. mid-terms

* .HSI down more than 2 pct, .HSCE loses 1.3 pct

* Investors await U.S. elections’ impact on trade war outcome

* Trading volume more than halved from Friday, when stocks rallied

By Noah Sin

HONG KONG, Nov 5 (Reuters) - The Hong Kong stock market fell on Monday as investors shunned riskier assets, with hopes fading for an early resoluton of the U.S.-China trade war, and uncertainty cast by U.S. mid-term elections. ** The main Hang Seng index was down 2.1 percent at 25,934.39. The Hang Seng China Enterprises index lost 1.3 percent to reach 10,544.92. ** Stocks fell across the board. The sub-index for the IT sector dipped 3 percent, the property sector dipped 2.4 percent, and financial sector shares were down close to 2 percent. ** The fall marked a sharp U-turn from Friday, when investors filled in buy orders on the back of hopes of a breakthrough in trade talks between the United States and China.. But the rally was never going to last long, said Linus Yip, chief strategist at Hong Kong-based First Shanghai Securities. ** “A lot of Friday’s rise can be attributed to short covering,” he said, noting that the news of a trade deal nearing on Friday prompted those previously shorting Hong Kong stocks to change course. “But these are one-off orders, not long term buy orders. You can see that in the change in trading volume,” Yip added. ** About 1.68 billion Hang Seng index shares were traded on Monday. The volume traded in the previous trading session was 3.63 billion. ** The price action and uncertainty in the Hong Kong market are making it tougher for investors to increase their exposure, according to Patrick Yiu, managing director at CASH Asset Management. ** “Even if you wanted to enter this market, you wouldn’t do so [with the Hang Seng] at 26,000 points,” he said, referring to the levels achieved by the index on Friday. “You would also need to factor in the mid-term elections.” ** The top gainer on the Hang Seng was China Petroleum & Chemical Corp, up 1.1 percent, while the biggest loser was AAC Technologies Holdings Inc, which was down 7.4 percent. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 1.2 percent, while Japan’s Nikkei index closed down 1.6 percent. ** The three biggest H-shares percentage decliners were China Resources Land Ltd, which was down 4 percent, Tencent Holdings Ltd, down by 3.7 percent, and Guangzhou Automobile Group Co Ltd, which fell by 3.2 percent. ** The top gainers among H-shares were CGN Power Co Ltd up 1.6 percent, followed by China Petroleum & Chemical Corp, gaining 1.1 percent and Sinopharm Group Co Ltd , up by 0.8 percent.

Reporting by Noah Sin; Editing by Simon Cameron-Moore

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