HONG KONG/SHANGHAI: - Hong Kong and China shares slipped on Friday, with trading most active in the auto sector, where investors dumped shares in a thin market on new restrictions on car sales in Beijing.
The Hang Seng Index ended down 0.3% at 22,833.8 in a shortened session to post a slight gain of 0.5% on the week after two successive weeks of declines.
Shanghai's key stock index fell 0.5% on Friday morning, dropping below the 250-day moving average, although most analysts said the index would be rangebound until the end of the year.
The Shanghai Composite is down 1.8% this week as a shortfall of funds in the financial system curbed the amount of cash available for stock trading. The money market is experiencing an acute squeeze after a series of official monetary tightening steps since mid-October.
News of Beijing's decision to limit car registrations to tackle traffic congestion in the capital prompted a selloff in auto stocks, although some analysts downplayed the move as a knee-jerk reaction.
In Shanghai, top auto producer SAIC Motor Corp Ltd and another major maker Chongqing Changan Automobile Co both dropped more than 1.5%.
In Hong Kong, Dongfeng Motor Group Co Ltd fell 7.9%, the sharpest drop in more than two years. Brilliance China Automotice Holdings Ltd, the sole distributor of Bayerische Motoren Werke AG (BMW) cars in China, fell 7.5% to a two-month low.
Brilliance China is up 147% this year.
"Sentiment is horrible and that's the problem," said Scott Laprise, an auto analyst at CLSA. "People sell their shares first and ask questions later."
Laprise said that while the overall impact would not be that big since Beijing accounted for about 5 percent of cars sold in China, investor appetite for auto shares had taken a hit.
Banking stocks outperformed, helping to limit losses, on expectations that the recent liquidity squeeze in China's money market may delay the central bank's next tightening steps, traders said.
All 16 banks listed on the Shanghai and Shenzhen stock exchanges rose, with China Everbright Bank Co Ltd, the most actively traded stock, jumping 5.7%, and Agricultural Bank of China Ltd, the second most active, rising 0.8%.
BEIJING TACKLES CONGESTION
The authorities will introduce a slew of measures, including limiting the quota for new small passenger vehicles to 20,000 per month in 2011 to ease the capital's chronic traffic gridlocks, the municipal government said on its website on Thursday.
"It's nothing more than local news. Its impact on nationwide car sales will be very limited," said Chen Shaodan, a senior analyst at China Development Bank Securities in Beijing. "The overall stock market is weak, not only the auto sector. People scrambling for money needed to sell some stocks and they made the auto news an easy excuse."
Still, the impact may extend beyond Beijing's limits as reflected by BMW shares in Germany closing down 1.7%, the top loser on Germany's benchmark DAX index, which closed down 0.1 percent on Thursday.
BMW, the world's biggest luxury car maker, has said it plans to ramp up capacity in China and is well ahead of achieving its full-year target for sales China.
Nomura estimates that BMW's joint venture with Brilliance achieves about 12.3% of its national sales volume in Beijing, citing data from China Auto Market.
In South Korea, Hyundai Motor Co, manufacturer of most of Beijing's taxis, fell 2.5%, dragging the KOSPI lower on the day. ' Reuters
The Hang Seng Index ended down 0.3% at 22,833.8 in a shortened session to post a slight gain of 0.5% on the week after two successive weeks of declines.
Shanghai's key stock index fell 0.5% on Friday morning, dropping below the 250-day moving average, although most analysts said the index would be rangebound until the end of the year.
The Shanghai Composite is down 1.8% this week as a shortfall of funds in the financial system curbed the amount of cash available for stock trading. The money market is experiencing an acute squeeze after a series of official monetary tightening steps since mid-October.
News of Beijing's decision to limit car registrations to tackle traffic congestion in the capital prompted a selloff in auto stocks, although some analysts downplayed the move as a knee-jerk reaction.
In Shanghai, top auto producer SAIC Motor Corp Ltd and another major maker Chongqing Changan Automobile Co both dropped more than 1.5%.
In Hong Kong, Dongfeng Motor Group Co Ltd fell 7.9%, the sharpest drop in more than two years. Brilliance China Automotice Holdings Ltd, the sole distributor of Bayerische Motoren Werke AG (BMW) cars in China, fell 7.5% to a two-month low.
Brilliance China is up 147% this year.
"Sentiment is horrible and that's the problem," said Scott Laprise, an auto analyst at CLSA. "People sell their shares first and ask questions later."
Laprise said that while the overall impact would not be that big since Beijing accounted for about 5 percent of cars sold in China, investor appetite for auto shares had taken a hit.
Banking stocks outperformed, helping to limit losses, on expectations that the recent liquidity squeeze in China's money market may delay the central bank's next tightening steps, traders said.
All 16 banks listed on the Shanghai and Shenzhen stock exchanges rose, with China Everbright Bank Co Ltd, the most actively traded stock, jumping 5.7%, and Agricultural Bank of China Ltd, the second most active, rising 0.8%.
BEIJING TACKLES CONGESTION
The authorities will introduce a slew of measures, including limiting the quota for new small passenger vehicles to 20,000 per month in 2011 to ease the capital's chronic traffic gridlocks, the municipal government said on its website on Thursday.
"It's nothing more than local news. Its impact on nationwide car sales will be very limited," said Chen Shaodan, a senior analyst at China Development Bank Securities in Beijing. "The overall stock market is weak, not only the auto sector. People scrambling for money needed to sell some stocks and they made the auto news an easy excuse."
Still, the impact may extend beyond Beijing's limits as reflected by BMW shares in Germany closing down 1.7%, the top loser on Germany's benchmark DAX index, which closed down 0.1 percent on Thursday.
BMW, the world's biggest luxury car maker, has said it plans to ramp up capacity in China and is well ahead of achieving its full-year target for sales China.
Nomura estimates that BMW's joint venture with Brilliance achieves about 12.3% of its national sales volume in Beijing, citing data from China Auto Market.
In South Korea, Hyundai Motor Co, manufacturer of most of Beijing's taxis, fell 2.5%, dragging the KOSPI lower on the day. ' Reuters
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