Hong Kong shares up, China down

Hong Kong shares edged up 0.1 percent on Tuesday, reversing early losses to snap a five-session losing streak, with defensive names strong as investors hunted for safety while risk aversion stayed high in global markets. After European stock futures opened higher in the mid-afternoon, a bout of short covering in Hong Kong - particularly in stocks that have been hard hit in the last week - helped lift the Hang Seng Index off oversold levels on the charts.
The index closed at 18,251.6 points, again finishing above its 50 percent Fibonacci retracement of its rise from October 4 lows to October 28 highs, at about 18,208 points. For a second straight day, it also tested in early trade the October 21 high at about 18,082, the lower end of a chart gap that formed between that level and the low of October 24 at about 18,435.
"It's a good sign that the markets held up at that level, but trading could be choppy for the rest of the week, with the US Thanksgiving holiday on Thursday keeping overseas interest low," said Alex Wong, Ample Finance's director of asset management. Companies in defensive sectors such as utilities were consistently strong throughout the day, with CLP Holdings Ltd and China Resources Power Holdings Co Ltd climbing 1 and 2.3 percent respectively, with the Hang Seng Utilities Index outperforming, gaining 0.8 percent on the day.
Among those who saw the most pronounced gains on short covering were Chinese property stocks that have been among the hardest hit and heavily shorted in November after outpacing gains in the broader market in October. Longfor Properties Co Ltd closed up 4.2 percent in good volume after the company denied market chatter on Monday that the company sold apartments at a Beijing development over the weekend at prices that were below cost.
The Chinese developer had slid 12.4 percent in the five sessions before Tuesday, with short selling averaging 28 percent of its daily turnover during that period, and peaking at 59 percent on Monday. The Shanghai Composite Index ended down 0.1 percent at 2,412.6, extending a four-session losing streak with A-share turnover hovering at the lowest in a month. Energy and material names among the biggest losers.
But with China's money markets reflecting a growing view that Beijing will start to ease monetary policy in coming months as global growth slows and domestic inflation slows, mainland stock markets could also see a lift. Sectors that are considered more sensitive to policy changes and which were weak on Tuesday, such as financials, energy and materials, could lead any uptick.
On Tuesday though, coal plays were among the top drags on the Shanghai benchmark. China Shenhua Energy Co Ltd lost 0.6 percent, taking its losses since a three-month high on October 15 to more than 8 percent. Yangquan Coal shed 2.4 percent on Tuesday. Stocks of both companies could stay in focus as Chinese spot thermal coal prices fall for a second week, with mainland coastal utilities having already wrapped up their seasonal thermal coal stockpiling purchases.