Hong Kong shares mark worst week since October 2008: Chinese index slips

Hong Kong shares had their worst week since October 2008, losing 9.2 percent as escalating fears of a global recession caused investors to cut riskier holdings. On Friday, the Hang Seng Index was down 3 percent at one stage and recovered to close off 1.4 percent at 17,668.8 points as short-covering in mainland property counters provided a lift. Friday's volume was the heaviest in more than a month.
Pulling down the index were stocks involving steel, aluminium and other materials. Amid that the United States will slip into recession, investors shorted top beta plays. "Going ahead, people will probably go for the higher quality beta stocks and materials are not among them," said Tan Eng Teck, a Singapore-based investment manager at Treasury Asia Asset Management, which manages about $400 million worth of China-related assets.
China Overseas Land & Investment Ltd rose 2.6 percent and China Resources Land Ltd gained 3.9 percent on Friday after being among the top losers on Thursday. Mainland property developers, already under pressure for much of this quarter, slumped further on Thursday after mainland regulators clamped down on trust companies, requiring them to declare their exposure to Hong Kong-listed property developer Greentown China Holdings Ltd.
Ping An Insurance (Group) Co of China Ltd, which has its own trust company, lost 6.3 percent in the highest volume in a month, sinking to its lowest since May 2009. It lost more than 17 percent this week, its worst week since the 2008 financial crisis. Short-selling accounted for almost 18 percent of total turnover for Citic Pacific Ltd on Friday, according to data from the Hong Kong stock exchange.
Citic, a mainland steel producer, lost 5.7 percent, sinking to the lowest since April 2009 in early trade. The stock is down more than 38 percent on the quarter. Friday's losses took the Hang Seng below support at 17,878, or the 50 percent retracement of the rise from the cyclical troughs in October 2008 to its peak in November 2010.
The index is expected to be next supported at about 17,195, the trough recorded in July 2009. A loss of more than 18 percent in September to date has opened up five downside gaps on the charts for the Hang Seng Index, pointing to stiff technical resistance ahead. The Shanghai Composite Index closed down 0.4 percent at 2,433.2 points, but off intraday lows after gains in energy names cut losses in material stocks.
A-share turnover on the Shanghai bourse declined for the second-straight session, but stayed slightly above average as the Shanghai benchmark lost almost 2 percent on the week, its second-straight weekly loss. The Shanghai energy sector index gained 0.9 percent, while lower global commodities prices led Jiangxi Copper Co Ltd and Zijin Mining Group Co Ltd, China's largest gold miner, down about 3 percent each.