Hong Kong stocks were largely unchanged on Tuesday as investors paused for breath after a surge in property stocks and as they eyed some key US earnings reports. Shares in large cap property firms such as Sun Hung Kai Properties Ltd sagged after recent hefty gains based on ebbing interest rate worries and a robust local economy.
The Hang Seng properties sub index fell 0.55 percent to 18,776.
"We're seeing profit taking after a four day advance for the market," said Louis Wong, research director at Phillip Securities.
Traders expect the Hang Seng Index to resume a rally in the short term thanks to a surge in global fund flows and with strong expectations for upcoming Hong Kong blue chip earnings reports.
"Its very much a global liquidity theme. If you talk about fundamentals the Hong Kong markets isn't expensive, it isn't cheap. But property stocks are starting to look expensive," said Aaron Pong, fund manager at Standard Life Investments, which manages about US$3 billion in the region.
The blue chip Hang Seng Index ended 0.01 percent, or 0.74 points, higher at 14,567.74.
Volume was in line with recent averages with HK$21.5 billion (US$2.75 billion) worth of shares changing hands.
Traders said the market was likely to react to corporate earnings from US technology bellwether Intel Corp due later in the day along with comments from US Federal Reserve chairman Alan Greenspan.
Shares in the city's largest lender and Hang Seng heavyweight HSBC Holdings Plc weighed on the blue chip index as they fell 0.7 percent to HK$125.
The shares reacted to weaker-than-expected earnings from US banking giant Citigroup Inc.
HSBC reports interim earnings on August 1, and often sets the tone for the Hong Kong earnings season.
But China's top computer maker, Lenovo Group Ltd, gained 4 percent to HK$2.60 following stronger than expected earnings from US computer giant IBM.
Market research firm IDR late on Monday also said global shipments of personal computers jumped by a better-than-expected 16.6 percent in the second quarter thanks to stronger demand for low-cost systems, notebook computers and commercial PC replacements. Hang Lung Properties Ltd outperformed other blue chip property stocks, up 1.65 percent to HK$12.30 after Citigroup upgraded the firm to "buy" from "sell", citing a brighter retail environment.
China's top offshore oil producer CNOOC Ltd, a Hang Seng constituent stock, rose 1.09 percent to HK$4.65, ending a 3 day losing streak on concerns the firm may enter into a bidding war with fellow suitor Chevron Corp for control of US oil firm Unocal Corp a source close to the matter told Reuters on Tuesday that CNOOC considers its US$18.5 billion bid for Unocal "fully negotiated".