Hong Kong, China shares stay lower

Hong Kong shares fell for the third straight session on Thursday on thin volumes as growing contagion fears from Europe's debt crisis pulled down shares of mainland property firms and banks. Utility and telecom firms, seen less sensitive to an economic downturn, gained, underscoring the cautious sentiment. These shares comprised roughly half of the handful of the Hang Seng Index's components that rose on Thursday.
"What we are seeing these days is just volatility on low turnover. Most investors are only going to move on real macro changes, good or bad," said Benjamin Chang, chief executive officer of LBN Advisors, a firm that manages $450 million worth of assets in two China funds. The Hang Seng Index finished at 18,817.5 points, down 0.8 percent, although the exchange's turnover at HK$60 billion was still lower than its 20-day average of HK$66 billion.
The index earlier tested a technical support at 18,715 points, which was its low on October 26 and also the 38.2 percent Fibonacci retracement of its rise from the low on October 4 to the peak on October 28. Mainland property developers were among the biggest losers of the day, with China Resources Land Ltd, down 4.1 percent, while China Overseas Land & Investment shed 1.8 percent.
For China Resources Land, short-selling interest in the stock jumped to 35 percent of its total turnover on Wednesday, compared with an average 18.5 percent this month, pointing to bearishness in the stock and mirroring a trend in the sector over the past two months. The property sector sub index has lost more than 9 percent, compared to the 5.2 percent loss on the Hang Seng. It had gained 20 percent in October contributing most of the benchmark's 13 percent rise that month.
Investors, including LBN's Chang, are closely monitoring the response to a $3 billion initial share sale by Chow Tai Fook Jewellery Group, which would be an important gauge of international interest in the Hong Kong market, particularly since the jeweller is seeking a valuation of about 25 times its forecast earnings for fiscal 2013.
On the mainland, the Shanghai Composite Index closed at its lowest since October 27, down 0.2 percent at 2,463.1 after see-sawing between gains and losses for most of the day as A-share turnover slumped about 30 percent from Wednesday. Insurers were among its top drags, with industry-leading China Life Insurance Co Ltd and Ping An Insurance (Group) Co of China Ltd both off 1.3 percent.
This cut into strength in large-cap banks and energy counters, with China Coal Energy Co Ltd gaining 1.5 percent and Industrial and Commercial Bank of China Ltd up 0.5 percent. China Pacific Insurance Co Ltd lost 2 percent in volume 1.5 times its 30-day average.