(Updates to midday)
* Hang Seng Index firms 0.1 percent,
* Shanghai Composite up 0.4 pct, CSI300 up 0.6 pct
* Sands China to join HSI effective after market close
* Softer crude oil prices help refiners, hit CNOOC
* Chalco down 3.6 pct on aluminum output cut, JPM downgrade
By Vikram Subhedar
HONG KONG, June 1 (Reuters) - Hong Kong shares edged higher on Friday largely on short-covering in financials, although disappointing manufacturing data from China kept most cyclical sectors such as materials and mining companies weak.
Two surveys that pointed to sluggish Chinese factory activity in May signalled a deeper-than-forecast deterioration in demand at home and abroad, but also increased the likelihood of further policy easing.
The Hang Seng Index, which opened weaker on the day, was up 0.14 percent at the midday trading break. The slim gain did little to excite investors after last month's 12 percent slump almost wiped out the benchmark's gains for the year.
On the mainland, the Shanghai Composite Index was up 0.42 percent, while the large-cap focussed CSI300 rose 0.55 percent as China's domestic benchmarks continued to outperform Asian markets on hopes of policy easing.
"The big hangover from Europe remains and everyone's looking for safe havens," said Tom Kaan, a director at Louis Capital Markets in Hong Kong. "The problem is where is the safe haven and that has kept large long-only investors on the sidelines because this isn't the environment in which to double-down. Activity is largely down to those who can make the two-way bets."
Short-selling in Hong Kong has remained relatively high through the market's weakness, with short interest expressed as a percentage of turnover averaging about 10 percent in May and rising above 14 percent on two days in the past two weeks, according to data from the exchange.
Historically, short-selling on average has comprised about 8 percent of daily turnover in Hong Kong.
Friday's gains were supported by strength in banking stocks that saw some investors cover bearish bets ahead of U.S. payrolls data due later in the day, said traders.
Index rebalancing activity, which accounted for a large part of trading on Thursday due to adjustments in the MSCI indexes, is expected to play a role again as the Hang Seng Index sees changes effective at the close of trading.
Sands China Ltd will become the first casino operator to become a benchmark constituent in Hong Kong and is expected to have a weighting of 1.1 percent.
Traders estimate passive investors and exchange-traded funds that track the index will have to buy about $123 million worth of Sands China stock, representing twice its 30-day average turnover, as a result of its inclusion.
China Construction Bank Corp and Tencent Holdings Ltd, which had seen about a fifth of their daily turnover in Hong Kong shorted in the previous session, were the biggest boosts on Friday.
CCB rose 0.6 percent while Tencent, China's dominant internet firm, rose 1.3 percent.
A drop in crude oil prices, partly due to weakening demand in China, helped refiners who would benefit from wider refining margins.
China Petroleum and Chemical Corp (Sinopec), Asia's largest refiner, rose 0.3 percent while PetroChina Co Ltd was up 0.8 percent. CNOOC Ltd, a pure exploration and production company, dropped 1.1 percent.
Aluminum Corp of China Ltd fell 3.6 percent after JPMorgan downgraded the stock to "underweight" from "hold" and forecast a loss for the company from an earlier profit projection.
Chalco has lost 27.2 percent from its February 2012 high as weak demand, a supply glut and a drop in alumina prices due to a slowing economy have kept investors at bay. (Reporting by Vikram Subhedar; Editing by Chris Lewis)
- Link this
- Share this
- Digg this
- Reprints
No comments:
Post a Comment