Shares tumble as 'risk-off' trumps valuations

HONG KONG: The benchmark Hang Seng Index fell 1.17 percent to 21,695.26 on Friday bringing its losses this month to 8.4 percent, the worst two-week decline since November last year.

Hong Kong shares barrelled through several key chart support levels this week as growing bearishness on Chinese equities combined with Greece's debt woes rattled investors.

On the mainland, the Shanghai Composite Index fell 0.81 percent to an 8-1/2 month low on tightening liquidity in money markets and worries over a potential policy move over the weekend.

The Hang Seng Index fell below two important chart levels this week after failing to break up above its 250-day moving average, with turnover rising as losses deepened, suggesting that the bears' grip on the market is unlikely to loosen any time soon. On Friday, the index fell below the August 2010 high around 21,800. The 250-day moving average at 22,670.2 is likely to be stiff overhead resistance for any relief rally.

Tencent Holdings Ltd fell 4.2 percent and gave up more of its relative out performance against the Hang Seng Index this year. Traders said uncertainties around "variable interest entities" corporate structures often used by Chinese internet companies were keeping investors wary on the sector.

Tencent is down 15 percent this month, with charts confirming a bearish "triple top" pattern that usually indicates a trend reversal.

Oil major PetroChina Co Ltd posted its biggest intraday percentage gain in eight months early on Friday, surging more than 5 percent on rumours that China may announce a natural gas price rise and a broker upgrade. The shares later gave up most of those gains to end 1.5 percent higher.

Copyright Reuters, 2011