HONG KONG (XFN-ASIA) - Share prices closed sharply lower as investors locked in profits for a second day following the recent rally, with Wall Street's losses overnight and upcoming US jobs data prompting caution.
Turnover dropped from yesterday's record high of nearly 210 bln hkd but was still in triple digits as profit-taking gathered pace in late trade.
China Mobile, property stocks and oil counters led the declines, while HSBC, Hutchison Whampoa and MTR Corp provided some support to the key index.
China Southern Airlines fell sharply after news that tycoon Li Ka-shing sold some shares of the carrier, while mainland property firms were hit by talk that Beijing may announce new measures to cool the housing market.
The Hang Seng Index closed down 505.96 points or 1.84 pct at 26,973.98, off a low of 26,746.63 and high of 27,423.11.
Turnover was 147.54 bln hkd.
'Investors have begun worrying about different issues; that's why the market suffered a sharp drop for the second consecutive day,' said Alex Wong, asset manager at Ample Capital.
While noting that there is caution ahead of US jobs data, Wong said that investors are also speculating about the reasons for the delay in the start of China's program that allows mainland individuals to buy stocks in Hong Kong directly.
He said continuing delays in the launch of the scheme has prompted talk that mainland authorities might be putting in place some restrictions.
'Some people have begun speculating that the choices of stocks which mainland investors may buy in Hong Kong may be restricted to a select number' due to China's fears that the program will be exploited to launder money out of the country, Wong said.
If the program is subject to restrictions, it may cap inflows of funds from the mainland, he said.
Wong added that some investors also exercised caution as they were reminded of global stock market crashes in October 1987 and October 1997.
'The market's sharp falls for two consecutive days has reminded some investors about October market crashes in the past,' he said.
Castor Pang, strategist at Sun Hung Kai Financial Group, said that while overall sentiment remains positive, scores of investors used Wall Street's fall last night, upcoming US jobs data and talk of possible new tightening measures by Beijing as excuses to continue locking in profits.
The US will release September non-farm payrolls data on Friday, which could provide clues on possible interest rate moves by the Federal Reserve at its meeting later this month.
'Market talk about (China's) plans to curb overheating in Beijing's housing market prompted some investors to sell down mainland property counters,' Pang said.
He said he believes the local bourse could see more downside in the short term, while support is seen at the 25,000 points level.
Among blue chips, China Mobile closed down 3.20 hkd or 2.47 pct at 126.60, while HKEx was down 6.4 hkd or 2.73 pct at 228.4.
HSBC rose 1.30 hkd or 0.88 pct to 149, Hutchison Whampoa was up 0.50 hkd or 0.61 pct at 81.85 and MTR was up 1.90 hkd or 7.9 pct at 25.95.
Pang noted speculation that China's sovereign wealth fund could have bought into HSBC.
'There was some talk that the fund may have bought HSBC as it starts investing overseas to get a better yield for China's foreign exchange reserves,' he said.
Properties were sharply lower, with the sectoral sub-index down 1,214.80 points or 3.79 pct at 30,834.16.
Cheung Kong was down 5.40 hkd or 4.26 pct at 121.50, Sun Hung Kai fell 4.90 hkd or 3.83 pct to 123, Sino Land lost 0.46 hkd or 2.34 pct at 19.18 and New World Development fell 0.70 hkd or 3.28 pct to 20.65.
Henderson Land was down 0.75 hkd or 1.26 pct at 58.65, while unit Henderson investment shed 0.16 hkd or 1.14 pct to 13.82.
Henderson Land announced yesterday that it will acquire a 39 pct stake in Hong Kong and China Gas (Towngas), currently held by unit Henderson Investment.
Towngas was up 0.16 hkd or 0.81 pct at 19.88, extending yesterday's gain.
Among China property firms, Agile Property was down 1.58 hkd or 9.13 pct at 15.72, China Overseas Land was down 0.68 hkd or 3.74 pct at 17.48, Guangzhou R&F fell 1.15 hkd or 3.16 pct to 35.20 and Beijing Capital Land lost 0.22 hkd or 2.99 pct at 7.13.
China Southern Airlines finished down 0.80 hkd or 7.01 pct at 10.62 after news that Cheung Kong chairman Li Ka-shing sold 8.616 mln shares of the carrier last week, reducing his holding to 14.61 pct from 15.35 pct.
Other mainland airlines also fell, with Air China down 1.02 hkd or 9.07 pct at 10.22 and China Eastern Airlines down 0.27 hkd or 3.52 pct at 7.40.
Oil stocks fell after crude prices dropped below the 80 usd a barrel level.
CNOOC was down 0.80 hkd or 6.37 pct at 11.76, PetroChina lost 0.54 hkd or 3.86 pct at 13.46 and Sinopec fell 0.21 hkd or 2.24 pct to 9.18.
China Properties Group surged 0.87 hkd or 17.33 pct to 5.89 on news that UK hedge fund The Children's Investment Fund (TCI) is buying a 4.76 pct stake in the company.
China financials were mostly lower, with China Construction Bank down 0.23 hkd or 3.18 pct at 7.0, Bank of China sliding 0.01 hkd or 0.23 pct to 4.28, Bank of Communications slipping 0.19 hkd or 1.93 pct to 9.67 and China Life shedding 0.85 hkd or 1.83 pct to 45.65.
New listing Dachan Food ended at 2.95 hkd, up 1.72 pct from its IPO price of 2.9.
Midland Realty Holdings fell 0.71 hkd or 8.50 pct to 7.64 after news that its chairman Freddie Wong is selling 64 mln shares of the company at 7.85 hkd per share.
Elsewhere, China Communications Construction was up 0.85 hkd or 4.15 pct at 21.35, while China Unicom down 0.66 hkd or 4.02 pct at 15.74.
Metals and mining firms were sharply lower, with Zijin Mining down 1.06 hkd or 8.75 pct at 11.06, Jiangxi Copper falling 0.90 hkd or 3.51 pct to 24.75 and Lingbao Gold losing 0.24 hkd or 3.46 pct at 6.70.
The Hang Seng China Enterprises index finished down 590.48 points or 3.41 pct at 16,727.05.
Ample Capital's Wong said the market's movement tomorrow will have a crucial bearing.
'If the market falls by another 300 to 400 points tomorrow, it could trigger panic selling,' he said.
(1 usd = 7.8 hkd)
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