HONG KONG: Hong Kong shares ended flat on Thursday as dealers cashed in profits following a five-session rally. The benchmark Hang Seng Index edged down 3.25 points to 24,281.80 on turnover of HK$87.18 billion ($11.20 billion). Analysts said the index would get strong support from liquidity inflows and expectations that China's credit tightening cycle, after a fourth rate rise in seven months on Tuesday, is nearing the end.
"There are obvious signs that fund managers have re-adjusted their portfolios after the earthquake in Japan and are now shifting their funds to Hong Kong," Alvin Cheung, associate director of Prudential Brokerage, said. Property firms led Thursday's falls on fears that banks in Hong Kong might raise mortgage rates later this year.
"The US is widely expected to raise interest rates in the latter part of this year, and Hong Kong will have to follow suit because of the currency peg," Cheung said. Cheung Kong was down 2.2 percent at HK$128.60 and Hang Lung Properties dropped 1.5 percent to HK$35.20 while Sun Hung Kai Properties fell 1.0 percent to HK$127.30. Oil and gas producer CNOOC rose 1.5 percent to HK$20.70 and oil refiner Sinopec rose 1.5 percent to HK$8.14 as crude sat near two-and-a-half-year highs. Chinese shares closed up 0.22 percent. The Shanghai Composite Index, which covers both A and B shares, was up 6.55 points at 3,007.91 on turnover of 152.9 billion Yuan ($23.2 billion). The rise came despite Beijing raising petrol and diesel prices Wednesday, the third rise since December, adding upward pressure to inflation a day after the central bank hiked interest rates to dampen rising prices.
"The upside in the market may be limited amid growing inflationary pressures following the hike in gasoline and diesel prices," Capital Securities analyst Jacky Zhang told Dow Jones Newswires. Steelmakers led gains on hopes for higher prices amid rising demand. Hunan Valin Steel ended 3.4 percent higher at 4.60 Yuan, Shanxi Taigang Stainless Steel was up 1.7 percent at 6.10 Yuan, and Angang Steel added 0.5 percent to 8.16 Yuan. Machinery manufacturers also strengthened on expectations for robust first-quarter earnings growth. Changsha Zoomlion Heavy Industry Science and Technology Development rallied 4.6 percent to 17.02 Yuan after forecasting net profit to rise by up to 170 percent. Shantui Construction Machinery surged 3.5 percent to 24.50 Yuan, and Sany Heavy Industry rose 2.7 percent to 28.89 Yuan.
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