Hong Kong shares slide, China rises on Chalco

Hong Kong shares fell for a fifth consecutive session on Wednesday, hurt by financial stocks and property developers that investors thought were vulnerable to slowing economic growth. Investors have, in the past few months, gone from worrying about the impact of tightening credit on Chinese banks and the real estate industry to speculating how demand if it continues to slow will affect the financial and property sectors.
"In China, we've seen a weakness in demand for property yet the supply coming on this year is going to be up 30 percent. So there's a huge risk of a large inventory build which causes a reduction in construction starts as we move into the second half of this year," Adrian Mowat, J.P. Morgan's Chief Emerging Markets Strategist, told Reuters Television in an interview. Hong Kong's main stock index traded down 0.9 percent to finish at 22,661.63, pushing it back toward the low last month of 22,519.66.
Chinese commodities giant Aluminium Corp of China Ltd (Chalco) bucked the bearish trend, boosted by a local news report saying its parent company was embarking on a new rare earths smelting joint venture with five other companies in Jiangsu, analysts said. The stock gained 4.2 percent in Hong Kong in more than 3 times its 30-day average volume, and was up 9.97 percent in Shanghai in more than 5 times its 30-day average volume. Chalco said in a statement it did not have any deals to announce.
In China, Chalco's rise helped to lift other aluminium producers, with Yunnan Aluminium Co Ltd and Shandong Nanshan Aluminium Co Ltd up 2.5 and 2.4 percent in good volumes. Aluminium plays, along with bargain hunters picking up battered property counters in the afternoon session, helped the benchmark Shanghai Composite index close higher for a third-consecutive session. The benchmark Shanghai Composite Index rose 0.2 percent to 2,750.3 points.
Vanke, the country's largest developer by sales, jumped 3.7 percent after it said its May property sales jumped 76.4 percent from a year earlier to 9 billion yuan ($1.4 billion), rebounding from a slump the previous month. But Vanke is still down 8.2 percent since hitting its 2011 high in mid April. "These are probably short-term plays because pretty severe long-term risks still lurk for the property sector," said Cao Xuefeng, Huaxi Securities' head of research in Chengdu.