Hong Kong shares ended flat Monday as a positive lead from Wall Street was offset by fears about the growing crisis in Iraq. The benchmark Hang Seng Index dipped 18.50 points to 23,300.67 on turnover of HK$47.83 billion (US $6.17 billion). With few catalysts, investors took their lead from events in Iraq, where Islamic militants have swept though the country, taking over key cities and moving towards Baghdad as the US-trained Iraqi army crumbles.
US President Barack Obama raised the prospect of air strikes, saying his national security team "is looking at all the options". However, while an aircraft carrier group has been deployed to the Gulf, he has ruled out any return of combat troops. Washington is also preparing to hold talks with Iran to try to resolve the crisis, a report said, as the US condemned Sunday a "horrifying" massacre by Islamic militants of hundreds of Iraqi soldiers.
The crisis overshadowed Friday's gains on Wall Street, where the Dow rose 0.25 percent, the S&P 500 added 0.31 percent and the Nasdaq put on 0.30 percent. However, the indexes were all lower over the week. Fears of a squeeze on oil supplies from the country, a major exporter, sent prices surging to a nine-month high, in turn lifting energy firms. PetroChina rose 0.95 percent to HK$9.58 and CNOOC added 0.29 percent to HK$13.90.
But HSBC eased 0.25 percent to HK$81.15 and Cathay Pacific Airways slipped 0.28 percent to HK$14.48. Internet firm Tencent rose 0.17 percent to HK$116.3, Bank of China eased 0.53 percent to HK$3.74 and Ping An insurance company gained 0.16 percent to HK$61.8. In China the benchmark Shanghai Composite Index rose 0.74 percent, or 15.26 points, to 2,085.98 on turnover of 80.0 billion yuan ($12.9 billion). The Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 0.66 percent, or 7.17 points, to 1,086.53 on turnover of 114.4 billion yuan. Traders were buoyed by positive data last week pointing to an uptick in the world's number two economy, which has slowed this year.
"It's a normal reaction after data showed the economy is turning for the better. But there must be some better than expected stimulus policies to sustain gains in the market," Central China Securities analyst Zhang Gang told AFP. A cut in reserve requirements for banks, which took effect Monday and appeared to include more lenders than expected, also provided support.
China Minsheng Bank jumped 3.09 percent to 7.68 yuan and Industrial Bank rose 1.58 percent to 10.27 yuan after state media said the pair had been allowed to lower their reserve requirements. Electric car-related stocks extended gains on hopes they will benefit from US auto maker Tesla's open-source sharing of technology. Auto parts maker Wanxiang Qianchao surged 6.84 percent to 8.90 yuan in Shenzhen while SAIC Motor Corp gained 2.33 percent to 15.80 yuan.