Hong Kong shares end 0.83% lower

Hong Kong shares fell 0.83 percent on Monday after surging almost two percent at the end of last week and despite a record close on Wall Street.

The benchmark Hang Seng Index shed 231.03 points to end at 27,591.25 on turnover of HK$122.99 billion (US$15.87 billion).

The index surged almost two percent on Friday on speculation a tie-up with the Shenzhen exchange will be announced soon. However, traders took their cash off the table Monday.

Chinese-based firms listed in Hong Kong took a hit on worries that a flood of new companies listing on the mainland will drain liquidity.

Shanghai fell 0.58 percent, with 20 companies offering new shares for investor subscription this week, which tends to see dealers divert funds as they look to make the most of the initial public offerings.

“The IPO sales will have some impact of draining funds from the market,” Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment Management Co, told Bloomberg News.

And Patrick Mitchell, head of institutional sales at Ho Chi Minh City-based VinaSecurities JSC, added: “Markets are taking a hit as concerns continue to grow over the potential for new Chinese share sales. Short-term volatility can be expected.”

The Hang Seng China Enterprises Index, which tracks Chinese firms listed in the financial hub, fell 0.60 percent Monday.

Among the big losers, China Minsheng Banking Corp fell 2.53 percent to HK$10.80 and New China Life Insurance shed 2.48 percent to HK$49.20 while China Telecom was down 2.27 percent at HK$5.60.

Among other firms on the index, Hong Kong Exchange and Clearing was down 1.10 percent at HK$286.40 and Tencent fell 0.74 percent to HK$161.10 while New World Development eased 1.68 percent to HK$10.52.

China Mobile closed 2.84 percent lower at HK$105.90 after announcing plans to cut prices by about a third by the end of the year.

– New listings fears –

In mainland China the benchmark Shanghai Composite Index lost 0.58 percent, or 25.20 points, to close at 4,283.49 on turnover of 594.6 billion yuan ($97.3 billion).

But the Shenzhen Composite Index, which tracks stocks on China’s second exchange, jumped 2.40 percent, or 58.70 points, to 2,501.46 on turnover of 636.5 billion yuan.

The Shenzhen market was boosted after the China Securities Regulatory Commission (CSRC) last week denied reports it was probing Shenzhen’s ChiNext board, a Nasdaq-like market for high-growth companies, and advising funds on their exposure to some stocks.

The ChiNext rallied 4.53 percent to end at 154.27.

“The CSRC denial sent small company stocks, especially technology firms, higher today on expectations of their high growth potential,” Citic Securities analyst Zhang Qun told AFP.

Insurance companies were among the biggest losers in Shanghai. New China Life Insurance gave up 2.06 percent to 59.06 yuan and China Pacific Insurance eased 2.69 percent to 32.55 yuan.

But telecoms companies rose. Fuchun Communications surged by its 10 percent daily limit to 34.38 yuan in Shenzhen, while Datang Telecom Technology jumped 10 percent to 27.48 yuan in Shanghai.

New listing Wuxi Lead Auto Equipment surged 44 percent — the maximum allowed for new listings — to 30.54 yuan in Shenzhen.