💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

RPT-China shares slip as banks sold, HK gains capped

Published 09/15/2010, 05:51 AM
Updated 09/15/2010, 05:56 AM

(Repeating to more subscribers, with no change to text)

* Shanghai Composite down 1.3 pct; financials weak

* Hong Kong shares nudge up to one-month high, turnover low

* Hang Seng faces resistance at August high around 21,800 (Updates to close)

By Vikram S Subhedar and Farah Master

HONG KONG/SHANGHAI, Sept 15 (Reuters) - Chinese shares fell on Wednesday, backing away from a key resistance level again as investors continued to shy away from large-cap banking shares due to concern about more policy moves to rein in lending.

The Shanghai Composite Index closed 1.3 percent lower at 2,652.5, with banks generally weaker amid talk that regulators were considering higher deposit rates to help fight inflation and more stringent capital requirements at the country's top banks.

Hong Kong's Hang Seng index edged up 0.1 percent to a one-month high but gains were capped by the weak mainland market and resistance at the index's August high.

An academic adviser to China's central bank told a panel at the World Economic Forum in Tianjin that banks' deposit rates needed to be raised to help fight inflation.

China's banking regulator was considering raising capital adequacy ratios at banks deemed "systemically important" to as much as 15 percent, Bloomberg reported, citing a person familar with the matter.

"Banks and financials remain weak due to uncertainty over future policy measures," said Li Wenhui, an analyst at Huatai Securities in Nanjing.

Cheng Yi, an analyst at Xiangcai Securities, said the broader index wouldn't rise while large caps were under pressure, and that small and medium-sized companies faced profit-taking as investors' appetite faded.

Sentiment also took a hit after the index failed to breach 2,700 for the seventh time in the past month.

Bank of China Ltd slipped 0.9 percent, while China Merchants Bank fell 1.8 percent.

Mainland shares have seen far steeper falls than Hong Kong-listed counterparts this year and that has pushed them deeper into discount territory versus Hong Kong's H-shares, reversing a multi-year trend.

"Looking at the A/H share premium, particularly at banks, most Hong Kong investors are focusing on valuations, whereas here domestic investors look at short-term speculative moves, so there is a different trend," Cheng said.

HK LITTLE CHANGED, VOLUME LOW

Turnover in Hong Kong fell as the benchmark Hang Seng Index pulled back from resistance at last month's high around 21,800, having retraced its entire drop from the Aug. 9 high to Aug. 31 low.

The index has risen 6.5 percent this month, accompanied by rising turnover, as strong economic data from China and the United States prompted investors to put money back into the market.

That rally paused on Wednesday, with the index running into resistance and a lacklustre performance on Wall Street overnight.

"Markets look to be getting too used to good news," said a trader at Standard Chartered in an email to clients.

Major U.S. indexes struggled to push above their 200-day moving averages despite good retail sales data, strong results from retailer Best Buy and a good dividend from Cisco, said the trader.

Investors were keen on taking profits in certain sectors that had outperformed this month, such as telecoms and resources, analysts said.

China Unicom, up 12 percent this month before Wednesday's fall, closed 2.3 percent lower, while rival China Mobile slipped 0.2 percent.

Foxconn International Holdings Ltd extended Tuesday's gains, up 1.6 percent, on optimism that major customer Nokia's new smartphone strategy would benefit the beleaguered contract cellphone maker. (Editing by Alan Raybould)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.