Market Commentary and Intraday News

Hong Kong Bourse May See Rally Stall

252 days ago

(RTTNews) - The Hong Kong stock market has moved higher now in three consecutive trading days, surging more than 675 points or 3.5 percent in that span. The Hang Seng Index closed just above the 19,825-point plateau, and now investors figure to lock in gains when the market kicks off trade on Tuesday.

The global forecast for the Asian markets suggests consolidation ahead of the Federal Reserve's upcoming monetary policy meeting. The Fed is due to announce its latest decision on monetary policy on Thursday followed by a news conference by Chairman Ben Bernanke - and there remains considerable uncertainty about whether the Fed will announce another round of quantitative easing. The European and U.S. markets ended lower and the Asian bourses are expected to open in similar fashion.

The Hang Seng finished slightly higher on Monday as gains from the property stocks were dented by weakness from the mainland financials and a mixed performance from the oil companies.

For the day, the index gathered 25.01 points or 0.13 percent to finish at 19,827.17 after trading between 19,764.69 and 19,930.37 on turnover of 58.90 billion Hong Kong dollars.

Among the gainers, Henderson Land added 0.60 percent, while New World Development collected 0.61 percent, Sino Land jumped 1.69 percent, CITIC Pacific surged 3.91 percent and China Petroleum and Chemical Corp (Sinopec) jumped 1.29 percent.

Moving lower, Bank of China shed 1.05 percent, while Bank of Communications plunged 2.32 percent, Industrial and Commercial Bank of China dropped 2.07 percent, China Construction Bank fell 2.12 percent and CNOOC eased 0.28 percent.

The lead from Wall Street is negative as stocks moved mostly lower on Monday, after showing a lack of direction early in the session. The pullback came as some traders cashed in on the recent strength in the markets ahead of the Fed's two-day monetary policy meeting.

The Fed is due to announce its latest decision on monetary policy Thursday afternoon followed by a news conference by Chairman Ben Bernanke. Uncertainty about whether the Fed will announce another round of quantitative easing helped to drag stocks lower, although selling pressure remained relatively subdued.

Some negative sentiment was also generated by disappointing trade data from China, with a report showing an unexpected year-over-year drop in imports in the month of August.

Ahead of the announcement from the Fed, traders are likely to keep a close eye on Europe, as Germany's Constitutional Court is expected to rule on a request for a temporary injunction against Europe's permanent bailout fund.

Developments in Greece are also likely to remain in focus, with Greek Prime Minister Antonis Samaras reportedly having trouble getting the country's lenders to sign off on his government's proposed budget cuts.

Among individual stocks, shares of Titan Machinery (TITN) fell sharply after the farm equipment retailer reported weaker than expected second quarter earnings and cut its full-year guidance. Titan tumbled by 23.5 percent on the day.

Apparel retailer Michael Kors (KORS) also posted a notable loss after filing a registration statement with the SEC related to a proposed public offering of 20 million ordinary shares by certain shareholders.

The major U.S. averages were all down on Monday as the Dow fell 52.35 points or 0.4 percent to finish at 13,254.29, while the NASDAQ dropped 32.40 points or 1 percent to end at 3,104.02 and the S&P 500 slid 8.84 points or 0.6 percent to close at 1,429.08.

In economic news, China's exports rose 2.7 percent on year in August, the General Administration of Customs said on Monday - slightly weaker than the 2.9 percent growth forecast by economists. Meanwhile, imports saw a 2.6 percent annual decline against expectations for a 3.5 percent gain. The trade balance showed a surplus of $26.66 billion compared to expectations for a surplus of $19.5 billion.

Also, Chinese auto sales grew an annual 8.3 percent in August, the China Association of Automobile Manufacturers said on Monday, coming in at 1.5 million units. Within overall sales, sale of passenger cars came in at 1.22 million, up 11 percent on year. During the first eight months of the year, passenger car sales climbed 8 percent to 9.95 million units and overall vehicle sales rose 4.1 percent to 12.47 million units.

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