HONG KONG (XFN-ASIA) - Shares prices were lower midmorning as investors locked in profits after the market finished at a record high last Friday near the 24,000 points level.
Dealers said concerns over a delay in the start of China's trial program for direct mainland individual investments in Hong Kong dampened the mood.
China Eastern Airlines, however, surged after news that it has agreed to sell 24 pct stake to Singapore Airlines and Singapore government investment arm Temasek Holdings for 7.2 bln hkd.
At 11.15 am, the Hang Seng Index was down 144.51 points or 0.60 pct at 23,839.63, off a low of 23,611.02 and high of 23,908.59.
Turnover was 31.96 bln hkd.
'The market was hit by profit-taking after the strong recent gains, while concerns over a delay in mainlander investment program dampened sentiment,' said Matthew Kwok, research head at Tanrich Securities.
Reports said China's trial program to allow mainland individuals to invest directly in Hong Kong is facing delays due to infighting among China's regulatory agencies for control of the investment plan.
China's forex regulator announced last month that a pilot program will be launched in Tianjin to allow investors having accounts with a Bank of China branch there to buy Hong Kong stocks directly.
But the program has been put on hold due to disputes between the China Securities Regulatory Commission and the China Banking Regulatory Commission for administrative control, XFN-Asia affiliate market News International reported last week.
Some mainland media also said that authorities fear the new direct individual investment program will adversely affect existing QDII schemes.
China's qualified domestic institutional investor (QDII) scheme allows qualified mainland banks, insurers, trust firms and other institutions to invest overseas.
'The reported delay came at good time and was a very good excuse for investors to take profits' after some stocks were overbought recently, said Kwok of Tanrich Securities.
He said a correction is healthy given the market's recent run-up.
'Select stocks may attract buying again after today's drop,' he said.
Conita Hung, research head at Delta Asia Securities, said reports of a delay in Chinese individual investments triggered selling pressure.
But she said that it is just a matter of when, not if, China individual investments will flow in.
'It's just a matter of time. I believe the scheme will be confirmed sooner or later,' she said.
China Eastern Airlines saw strong buying interest after news that it has agreed to sell 24 pct stake to Singapore Airlines and Singapore government investment arm Temasek for 7.2 bln hkd.
The stock was up 3.0 hkd or 80.4 pct at 6.73, after hitting a high of 7.5.
Other mainland carriers also posted gains, with Air China rising 0.28 hkd or 2.89 pct at 9.98 and China Southern Airlines up 0.17 hkd or 1.71 pct at 10.10.
Tanrich's Kwok said the deal will help China Eastern Airlines to lower gearing ratio and enhance its operating performance.
Other China related stocks were hit by profit-taking, with the Hang Seng China Enterprises index down 207.09 points or 1.46 pct at 14.129.5.
Among financials, CCB lost 0.13 hkd or 1.99 pct at 6.4, ICBC was down 0.09 hkd or 1.77 pct at 4.99, China Life down 0.75 hkd or 1.99 pct at 36.9 and Ping An Insurance down 1.8 hkd or 2.34 pct at 79.2.
Metals stocks were lower after recent gains, with Jiangxi Copper down 0.62 hkd or 3.44 pct at 17.4, Angang Steel down 0.4 hkd or 1.53 pct at 25.8 and Chalco down 0.85 hkd or 3.75 pct at 20.55.
Blue chips were lower in line with the market, with China Mobile losing 1.078 hkd or 1.03 pct at 104, HKEx down 2.6 hkd or 1.81 pct at 140.9 and Hutchison Whampoa down 0.8 hkd or 1.03 pct at 76.75.
HSBC, however, was up 0.1 hkd or 0.07 pct at 139.8.
Among other local banks, Hang Seng Bank lost 0.2 hkd or 0.16 pct at 122.1, Bank of East Asia was down 0.4 hkd or 0.92 pct at 43.1 and BOC Hong Kong fell 0.1 hkd or 0.53 pct to 18.62.
Properties were mostly lower, with the sectoral sub-index down 155.22 points or 0.56 pct at 27,601.64.
Cheung Kong was down 0.6 hkd or 0.52 pct at 114.1, Sun Hung Kai fell 0.5 hkd or 0.48 pct to 103.5, Wharf lost 0.8 hkd or 2.49 pct at 31.3 and Henderson Land gave up 0.5 hkd or 0.74 pct at 54.5.
roby.lau@xfn.com
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