HONG KONG: Shares in Hong Kong and China continued to lose ground on Friday morning, May 6 as resources counters extended their slide following a plunge in commodities prices, although firmer banks and airlines helped limit losses on the benchmark indexes.
Turnover on the bourses remained light ahead of U.S. payrolls data, expected later on Friday, where a stronger-than-expected number could prompt investors back into risky assets such as emerging market stocks.
Hong Kong's Hang Seng Index was down 0.6 percent at 23,123.14 by the midday trading break, but traders said the index should find support near its 200-day moving average from which it bounced back following the Japan earthquake, currently at 22,895.6.
The China Enterprises Index was flat, supported by gains in transport stocks that were seen as beneficiaries of lower oil prices. Air China Ltd rose 4.3 percent while China Shipping Development Co Ltd bounced 4.6 percent off a two-year low.
Energy and materials issues were the top underperformers for a fourth session after commodities suffered a heavy selloff in the U.S. Commodities prices stabilised on Friday but the near-term outlook remains uncertain.
"What you're seeing is some doubts about growth being amplified by a rush of speculative money rushing for the exits at the same time," said Khiem Do, chairman of the Asia multi-asset team at Barings Asset Management in Hong Kong.
But the rout in commodity prices was not seen as by market players as a reflection on any major shift in expectations of growth, particularly in Asia.
"No way," said Do. "Asia is still on a solid growth path and consumption and infrastructure remain strong themes that we continue to play in our portfolios."
Non-resources-related counters, especially China financials, saw mild gains although volumes were light as Hong Kong markets headed into another holiday-shortened week.
Agricultural Bank of China Ltd rose 1.3 percent while Ping An Insurance (Group) Co of China Ltd was up 1 percent.
Cathay Pacific Airways Ltd topped the gainers list rising 2.7 percent in relatively high volume. Its shares are still down 7.7 percent this year.
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SHANGHAI EASES
Shares in China were led lower by energy stocks as investors cut positions following a sharp selloff in commodities that saw oil prices drop by as much as 10 percent on Thursday.[ID:nL3E7G601S]
The benchmark Shanghai Composite Index look poised to record its third consecutive weekly loss, down 0.6 percent at 2,857.0 at the midday trading break.
The energy sector underperformed the broader market for a third straight session, with PetroChina Co Ltd poised to be the biggest weight on the benchmark for the third day running, falling 1.9 percent to a four-month low.
"We have now broken a few key resistance levels," said Chen Shaodan, an analyst with China Development Bank Securities, pointing to how China's main stock index looked poised to finish under its 125-day moving average for a third session.
"It was originally motivated by policy concerns, but now falling global commodities prices are aggravating this downside correction."
Losses in energy plays easily outweighed gains in the utilities sector, the only positive on Friday, with the energy sub-index down 2.3 percent, compared with a 0.3 percent gain by the utilities sub-index .
"There is no domestic reason for the slide in energy stocks in the last few days. It doesn't make sense given high local demand," said Huatai Securities analyst Chen Huiqin. "They should rebound in the near term after this bout of falling oil and commodities prices ebbs." - Reuters
Turnover on the bourses remained light ahead of U.S. payrolls data, expected later on Friday, where a stronger-than-expected number could prompt investors back into risky assets such as emerging market stocks.
Hong Kong's Hang Seng Index was down 0.6 percent at 23,123.14 by the midday trading break, but traders said the index should find support near its 200-day moving average from which it bounced back following the Japan earthquake, currently at 22,895.6.
The China Enterprises Index was flat, supported by gains in transport stocks that were seen as beneficiaries of lower oil prices. Air China Ltd rose 4.3 percent while China Shipping Development Co Ltd bounced 4.6 percent off a two-year low.
Energy and materials issues were the top underperformers for a fourth session after commodities suffered a heavy selloff in the U.S. Commodities prices stabilised on Friday but the near-term outlook remains uncertain.
"What you're seeing is some doubts about growth being amplified by a rush of speculative money rushing for the exits at the same time," said Khiem Do, chairman of the Asia multi-asset team at Barings Asset Management in Hong Kong.
But the rout in commodity prices was not seen as by market players as a reflection on any major shift in expectations of growth, particularly in Asia.
"No way," said Do. "Asia is still on a solid growth path and consumption and infrastructure remain strong themes that we continue to play in our portfolios."
Non-resources-related counters, especially China financials, saw mild gains although volumes were light as Hong Kong markets headed into another holiday-shortened week.
Agricultural Bank of China Ltd rose 1.3 percent while Ping An Insurance (Group) Co of China Ltd was up 1 percent.
Cathay Pacific Airways Ltd topped the gainers list rising 2.7 percent in relatively high volume. Its shares are still down 7.7 percent this year.
''
SHANGHAI EASES
Shares in China were led lower by energy stocks as investors cut positions following a sharp selloff in commodities that saw oil prices drop by as much as 10 percent on Thursday.[ID:nL3E7G601S]
The benchmark Shanghai Composite Index look poised to record its third consecutive weekly loss, down 0.6 percent at 2,857.0 at the midday trading break.
The energy sector underperformed the broader market for a third straight session, with PetroChina Co Ltd poised to be the biggest weight on the benchmark for the third day running, falling 1.9 percent to a four-month low.
"We have now broken a few key resistance levels," said Chen Shaodan, an analyst with China Development Bank Securities, pointing to how China's main stock index looked poised to finish under its 125-day moving average for a third session.
"It was originally motivated by policy concerns, but now falling global commodities prices are aggravating this downside correction."
Losses in energy plays easily outweighed gains in the utilities sector, the only positive on Friday, with the energy sub-index down 2.3 percent, compared with a 0.3 percent gain by the utilities sub-index .
"There is no domestic reason for the slide in energy stocks in the last few days. It doesn't make sense given high local demand," said Huatai Securities analyst Chen Huiqin. "They should rebound in the near term after this bout of falling oil and commodities prices ebbs." - Reuters
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