Friday May 9, 07:08 AM
Hong Kong shares end morning lower on regional weakness, oil price rise UPDATE
HONG KONG (Thomson Financial) - Hong Kong shares finished the morning session lower on Friday, tracking losses in other Asian markets after crude oil prices topped $124 a barrel, exacerbating inflation worries around the region.
The Hang Seng Index was down 411.73 points or 1.6 percent at 25,038.06. Turnover was
HK$44.7 billion
The mainland's biggest oil refiners, China Petroleum and Chemical Corp or (Sinopec) and PetroChina, fell as investors worried that a continued rise in oil prices would squeeze refining
margins further.
Investors also decided to lock in profits ahead of the long weekend, while shares of Hong
Kong-listed mainland companies trended lower, tracking the decline in the Shanghai market. Hong
Kong markets are closed on Monday for a public holiday.
'Several negative factors have dragged down local stocks apart from crude oil prices, which weighed down the region,' said Peter Lai, investment manager at DBS Vickers.
'The long weekend encouraged profit-taking, while sentiment on the A-share market has turned cautious due to data expected next week and negative news concerning more shares flooding the market,' he said.
China will announce on Monday its consumer inflation data for April with analysts expecting the
figure to remain above 8 percent.
'The local market hasn't reacted to the surge in oil prices in a big way yet but as inflation mounts in other markets, particularly on the mainland, Hong Kong will start to feel the impact. If China raises (its interest) rates yet again, we will see another sharp correction here,' said Andrew Clarke, trader at SG Securities.
Asia's largest refiner China Petroleum & Chemical Corp (Sinopec) retreated 4.6 percent to HK$7.51 as rising crude oil prices are feared to squeeze its refining margins. Sinopec has plunged nearly 16 percent this week.
PetroChina, the mainland's largest oil and gas producer, which also has refining operations, slipped 3 percent to HK$11.08.
Upstream oil player CNOOC (0883.HK - news) , which has gained over 5 percent since last Friday's close, moved up a further 0.3 percent to HK$14.06.
Ping An Insurance lost 0.3 percent to HK69.30, after gaining as much as 2.9 percent earlier on news that the insurer will not proceed with its mega share and bond sale for at least six months.
'While the planned issue has clearly not been cancelled, six months is arguably such a long time in the Hong Kong and Shanghai equity markets that investors will have to refocus on operational news flow,' said CLSA in a note to investors.
The Shenzhen-based insurer bowed to market pressure after its shares were sold down earlier this week on reports that it will go ahead with its aggressive 160 billion yuan ($22.9 billion) fund-raising plan when sentiment in Chinese markets improves.
Wing Lung Bank (0096.HK - news) extended recent gains after reports on Thursday that China Merchants Bank is
back in the race to take over the Hong Kong-based bank. The stock edged up 0.3 percent to HK$139.30.
The mainland's sixth-largest lender was down 3.4 percent at HK$29.50 on caution over the acquisition cost.
Chinese telecom stocks continued to rise on market talk that Beijing is likley to announce an industry restructuring on May 17, coinciding with World Telecommunications Day.
China Unicom (0762.HK - news) , the smaller of the mainland's two mobile phone operators, rose 1 percent to HK$17.04. Fixed-line operators China Netcom gained 0.4 percent at HK$25.25 while China Telecom was up 0.2 percent at HK$5.55.
Asia's largest wireless carrier, China Mobile, lost 1.2 percent to HK$129.60. The company
remains interested in the African market although it has not submitted a bid for South Africa's leading telecom operator MTN Group, the South China Morning Post reported.
($1 = HK$7.80, 7 yuan)
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