Hong Kong stocks break winning streak

Hong Kong stocks retreated from new highs on Monday after investors sold recent gainers such as PetroChina as the prospect of policy tightening by Beijing sent mainland stock markets tumbling.
Investors also sold mainland lenders on worries of further interest rate increases by China's central bank after the bank's governor, Zhou Xiaochuan, said on Saturday that rate hikes could not be ruled out. Sinopec Corp, Asia's top oil refiner, sank amid uncertainties following the resignation of its chairman.
But PICC Property and Casualty Ltd jumped as much as 8.4 percent after the insurer said it would pay 812 million yuan (US $106.8 million) for a 28 percent stake in PICC Life Insurance. The market ended a six-session rising streak, falling with mainland bourses in the afternoon after setting fresh records in the morning.
"We're starting to hit some selling," said Howard Gorges, vice chairman of South China Brokerage. "After last week's run, there's certainly some profits to be taken. We could be in for some consolidation."
Meanwhile, many held the view that the market would stay near records as July 1 approaches, marking the 10th anniversary of the British handover of Hong Kong to Beijing. "I'm still a big believer that China wants to see the market stay strong just to show they can do it better," said Andrew Sullivan, head of sales trading at Daiwa Securities.
The benchmark Hang Seng Index closed down 0.8 percent, or 177.56 points, at 21,822.35, having earlier tapped its fifth straight record at 22,085.59. The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, dropped 1.6 percent, or 198.81 points, to 12,040.90, after hitting its seventh straight intraday record at 12,357.32.
Mainboard turnover was high at HK$84 billion (US $10.8 billion), but down from Friday's HK$95.8 billion. Sinopec fell nearly 3 percent to HK$8.79 after its chairman, Chen Tonghai, resigned for "personal reasons", the company said, amid press reports linking his departure to corruption probes.
Goldman Sachs, in a report dated June 25, said the uncertainty over Chen's resignation could be a near-term negative for Sinopec's share price as he had been pushing for China's oil product pricing reform. PetroChina Co Ltd slid 2.2 percent to HK$11.46. Among mainland lenders, China Construction Bank slid 2.3 percent to HK$5.2 and Bank of Communications fell 1.4 percent to HK$8.36.
PICC, now in its fifth straight session of record highs, raced up 4 percent to HK$6.78 in heavy trade as investors cheered its life insurance stake. Life insurance is seen the most profitable segment of China's insurance industry and a magnet for overseas strategic investment.
HSBC Holdings Plc, the biggest drag on the blue chips, declined nearly 1 percent to HK$144.20. Investors were weary of the global lenders' exposure to the US subprime market serving high-risk borrowers amid trouble at two Bear Stearns hedge funds that hold subprime mortgages.
China Shenhua Energy fell after Credit Suisse said in a report that the coal producer's share price could see limited upside amid rising operational costs and capex, dragging its shares down 4.3 percent to HK$26.95. Other coal stocks also dropped. China Coal dived 5.1 percent to HK$11.94 and Yanzhou Coal finished down 4.9 percent at HK$10.88.