Hong Kong and China shares edged lower on Friday on continuing weakness in energy stocks after the rout in commodity prices, although firmer bank and transportation counters saw benchmark indices settle above chart support levels. Turnover on the bourses remained light ahead of US payrolls data, expected later on Friday, where a stronger-than-expected number could prompt investors back into risky assets such as emerging market stocks.
Hong Kong's Hang Seng Index fell 0.4 percent to 23,159 after finding support near its 200-day moving average, currently at 22,895.6, from which it had bounced back following the Japan earthquake in March. "What you're seeing is some doubts about growth being amplified by a rush of speculative money rushing for the exits at the same time," said Khiem Do, chairman of the Asia multi-asset team at Barings Asset Management in Hong Kong.
The China Enterprises Index ended higher on the day, supported by gains in transport stocks that were seen as beneficiaries of lower oil prices. Air China Ltd rose 6 percent while China Shipping Development Co Ltd bounced 6.8 percent off a two-year low.
Non-resources-related counters, especially China financials, saw mild gains although volumes were light as Hong Kong markets headed into another holiday-shortened week. Agricultural Bank of China Ltd rose 2 percent.
Cathay Pacific Airways Ltd topped the gainers list on the benchmark rising 3.2 percent on twice the volume seen over the past month. Its shares are still down over 7 percent this year. China shares also weakened on Friday, recording a third consecutive weekly loss, weighed by energy stocks. The benchmark Shanghai Composite Index lost 0.3 percent on the day, and 1.6 percent on the week, to 2863.9 on Friday. It has lost 6.3 percent since hitting a 2011 high on April 18. "It was originally motivated by policy concerns, but now falling global commodities prices are aggravating this downside correction," said Chen Shaodan, an analyst with China Development Bank Securities,
The energy sector, which has been underperforming the broader market for most of the week, recorded its fourth consecutive and biggest weekly loss since last November, with the energy sub-index losing 1.7 percent on the day and 6.8 percent on the week. PetroChina Co Ltd the biggest weight on the benchmark for the week, fell 2.2 percent on the day to hit a four-month low. It remained technically oversold, with its 14-day relative strength index (RSI) value worsening, which at 11.6 is a level not since since September 2008.
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