Hong Kong Shares Inch Higher
After the drop in the Hang Seng Index due to the news of Kim Jong-il’s death and fears of instability in the region, Hong Kong stocks were able to rebound and close up 0.1 percent. Business Week reports:
The Hang Seng Index rose 0.1 percent to 18,080.20 at the close, with about five stocks declining for every four that rose in the 48-member gauge. The volume of stocks traded was about 40 percent less than the average over the past 100 sessions, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong gained 0.1 percent to 9,740.01.
“There’s some recovery as the market sentiment stabilizes after the panic yesterday on Kim’s death,” said Ben Kwong, chief operating officer at KGI Asia Ltd. “Riots or instability aren’t surfacing at the moment.” The Hong Kong gauge is “down to a relatively low level, so there’s bound to be some bargain hunting, but if you look at the turnover, liquidity is still not ample enough to create an upward trend.”
The Hang Seng Index slumped as much as 2.5 percent yesterday on news of Kim’s death. The gauge fell 22 percent this year, led by banks and developers, as China took steps to curb inflation and property prices, and on concern Europe’s debt crisis will spread. Companies in the gauge traded at 9.8 times forecast earnings, down from 14.4 times on Dec. 31, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index trades at 12.2 times.
Market watchers expect the Shanghai Composite could now see near-term support at about 2,200, the 76.4 percent Fibonacci retracement of its rise from its 2005 low to 2007 peak and a level it has now finished above for three straight sessions.
On Tuesday, weakness in financial shares outweighed strength in property ones. The Shanghai financial sub-index declined 0.3 percent, while a similar gauge for the property sector gained 0.1 percent.
See also China stock market faces 4 day slump via CDT.