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Friday, December 3, 2021

HK shares wipe out year’s gains, Shanghai up as state support seen

HK shares wipe out year's gains, Shanghai up as state support seenHONG KONG: Hong Kong shares ended lower Wednesday, wiping out year-to-date gains after a heavy intraday fall in Shanghai, although mainland shares were higher by the close amid rumours of fresh government support.

Hong Kong’s benchmark Hang Seng Index lost 1.31 percent, or 307.12 points, to end at 23,167.85 — its lowest point since December — on turnover of HK$ 91.77 billion (US$ 11.84 billion).

But Shanghai ended up 1.23 percent, erasing a more than five percent plunge in morning trade, in a surge dealers said was driven by expectations of fresh government support for the market.

The benchmark Shanghai Composite Index added 45.95 points to 3,794.11 on turnover of 599.5 billion yuan ($ 93.7 billion).

The market fell as much as 5.06 percent — approaching a low seen on July 8, before Beijing launched a market rescue — and rose by up to 1.69 percent in a volatile session after posting its biggest fall in three weeks on Tuesday.

The Shenzhen Composite Index, which tracks stocks on China’s second exchange, rose 2.19 percent, or 47.63 points, to 2,222.05 on turnover of 547.1 billion yuan.

“Only the ‘national team’… would be able to turn the tide like this,” Yingda Securities analyst Li Daxiao told AFP, referring to entities acting for the government.

“State forces or measures are the main forces supporting the market right now.”

After Shanghai shares collapsed in June, Beijing intervened with a rescue package that included funding the state-backed China Securities Finance Corp. (CSF) to buy stocks on behalf of the government.

Last Friday the securities regulator said the CSF would continue to stabilise the stock market for a number of years, though only during times of volatility.

Sentiment remains bruised in Shanghai, however, with persistent worries over the weak economy and the fallout from a surprise devaluation of China’s yuan currency last week.

“The market expects the government will step in if the Shanghai Composite falls towards 3,500 (points), but more and more people in the mainland see that the bull market is over,” Mari Oshidari, a Hong Kong-based strategist at Okasan Securities Group, told Bloomberg News.

“With weak sentiment we will continue to see unstable moves in the market.”

Hong Kong stocks have also been hit by concerns the weaker yuan will affect local companies, and because mainland equities are far cheaper.

Securities firms rose in Shanghai. China Merchant Securities gained 1.99 percent to 20.53 yuan and Citic Securities rose 1.43 percent to 20.61 yuan.

Shanghai-listed Hundsun Technologies surged by its 10 percent daily limit to 71.61 yuan after it said the CSF and another state-backed firm, Central Huijin Investment, now hold stakes in it.

In Hong Kong shares in flag carrier Cathay Pacific hit their lowest point since November after its earnings missed estimates, hit by fuel hedging costs.

The airline closed at HK$ 15.36, down 7.80 percent on the day.

Copyright AFP (Agence France-Presse), 2015

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