Hong Kong shares snapped a two-session winning streak on Monday, falling back from early gains after benchmark indexes met chart resistance as investors took profit on some of last week's outperformers. Mainland markets were mostly flat, with the Shanghai Composite Index closing up 0.03 percent at 2,331.14 after meeting downward trend line resistance at about 2,340-2,360.
With Greek debt talks - seen crucial to containing the euro zone crisis - at an impasse, the Hang Seng Index closed down 0.23 percent at 20,709.94 points, retreating from intraday gains after meeting resistance 20,975-21,017. These were highs reached in September and August, respectively, with 21,017 also the bottom of a 708-point gap that opened between August 4 and 5.
"Investors are taking profit and doing some rotational buying. A Greek deal could help scale this gap, but unless something fundamental changes, we are pretty much capped at current levels," said Jackson Wong, vice-president for equity sales at Tanrich Securities.
With several economic data points coming up this week, including January inflation and trade figures from China on Thursday and Friday, some investors were taking profit on last week's outperformers. Belle International Holdings Ltd, a China-focused footwear retailer, slid 3.1 percent after surging 10 percent last week. Chinese shipper Cosco Pacific Ltd was among the top percentage gainers on the Hang Seng Index, up 4.7 percent in volume exceeding twice its 30-day average, extending strong gains this quarter after slumping 33 percent last year.
China Unicom (Hong Kong) Ltd, a favourite with investors last year surging 47 percent as the broader market slumped about 20 percent, continued its downward spiral this quarter, ending the day down 4.5 percent. It is down 16.5 percent in 2012 to date. In a strategy note dated February 5, Nomura strategists said China offered an improved cyclical and policy story in the first half of 2012, despite longer-term structural challenges in the world's second-largest economy.
Chinese property developers were big drags in Hong Kong and mainland markets after China Vanke Co Ltd, the country's largest developer by sales, said on Friday that January sales stood at 12.2 billion yuan ($1.94 billion), a fall of 39 percent from a year earlier. Shenzhen-listed Vanke lost 2.2 percent, while Shanghai-listed Poly Real Estate declined 2.2 percent. In Hong Kong, China Resources Land Ltd lost 4 percent.
Financials were also weak in Shanghai, curtailing a challenge to a downward trend line on the Shanghai Composite at about 2,360. A decisive break above that level could point to further gains ahead. China Life Insurance Co Ltd and Ping An Insurance (Group) Co of China Ltd, were top drags in Shanghai, losing 2 and 1.3 percent, respectively. Kweichow Moutai Co Ltd was the top boost to the Shanghai Composite, up 1.1 percent.
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