HONG KONG: Hong Kong shares crept lower on Wednesday, led by losses in banks and property stocks as investors unwound positions in month- and quarter-end counters and bought into other issues that were most battered recently.
The Hang Seng Index finished down 0.66 percent at 18,011.06 points. The China Enterprise Index closed down 0.18 percent at 9,277.49 points.
The Shanghai Composite Index pared early gains to close down 0.95 percent at 2,392.06 points, its lowest closing level in almost 15 months as A-share turnover lingered at lacklustre levels.
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Hong Kong banks were among the top percentage losers among Hang Seng Index component stocks. Bank of East Asia and Hang Seng Bank lost about 5 percent, resuming its downward spiral as investors unwound positions in the stock in month and quarter-end window dressing.
They have lost more than 21 and 15 percent, respectively, since last Wednesday after Operation Twist was announced by the United States Federal Reserve. The territory is heavily influenced by US monetary policy with its local currency pegged to the dollar.
It is partly for this reason that Morgan Stanley analysts revised downwards their base case share price target for Hang Seng Bank from HK$107 to HK$85 in a report on Monday. With pressure from lower rates unlikely to go away and competition in Hong Kong fierce on both sides of the balance sheet, Morgan Stanley analysts said they expected net interest margins and profitability, to remain under pressure.
Esprit Holdings Ltd surged by as much as 15 percent after being hammered almost 60 percent in September to date after posting a 98 percent decline in annual net profits earlier in the month. Market participants attributed Wednesday's gains partly to short covering after short selling in the Europe-focused retailer averaged about 25 percent of its daily turnover in September.
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