Hong Kong, China shares weaker as rally pauses; Foxconn surges

Mon Nov 5, 2012 4:52am GMT

Related Topics

* HSI -0.4 pct, CSI300 -0.4 pct, Shanghai Comp -0.4 pct

* Turnover subdued as caution sets in ahead of US elections

* Fund inflow hopes aid developers, but financials weak

* Foxconn surges more than 30 pct after Citigroup upgrade

By Vikram Subhedar

HONG KONG, Nov 5 (Reuters) - Hong Kong shares eased slightly on Monday, as caution ahead of the U.S. presidential elections spurred mild profit-taking after a strong run-up last week lifted the local benchmark to a 15-month high.

The Hang Seng Index fell 0.4 percent to 22,026.1 by the midday trading break after recording a 2.6 percent gain last week. The index is up nearly 20 percent this year.

The China Enterprises Index, one of Asia's best performing benchmarks last month, was down 0.5 percent.

On the mainland, the CSI300 of the top Shanghai and Shenzhen listings and the Shanghai Composite were down 0.4 percent.

"Essentially risk appetite is still there but it's a bit subdued," said Tom Kaan, a director at Louis Capital Markets in Hong Kong, adding that the market may be taking its lead from stocks on Wall Street which fell despite better-than-expected jobs data.

"But the flow of funds into Asia is on and Hong Kong is one of the biggest beneficiaries," said Kaan, recommending investors to keep adding blue chips such as Hutchison Whampoa on any weakness.

Persistent capital inflows into Hong Kong has forced the territory's monetary authority to intervene 10 times in two weeks to defend its currency peg as money flowing in pushed the Hong Kong dollar to the strong end of its trading range.

Hopes of continued inflows supported Hong Kong property shares, the only sector to trade higher on Monday. The property sub-index was up 0.4 percent by midday.

Those gains were not enough, however, to offset profit-taking in index heavyweights such as HSBC Holdings and Industrial and Commercial Bank of China (ICBC) which fell 0.6 percent and 1.1 percent, respectively, after their rally last month.

HSBC is expected to report third-quarter results after market hours on Monday.

Financials were weak on the mainland as well with China Life down 1.4 percent and rival insurer Ping An off 1.7 percent. Banking shares were on the backfoot led by Bank of China which was down 0.7 percent.

Bucking the overall weak trend were shares of Foxconn International Holdings, the world's biggest contract maker of cellphones, which surged as much as 35 percent after Citigroup upgraded the stock to a 'buy' and said it expected the firm to start assembling iPhones this year. [I D :nL3E8M50KF]

Foxconn shares are still down nearly 28 percent this year.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.