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HONG KONG'S benchmark Hang Seng Index fell 2.4% this week and 0.44% on Friday to finish at 23,159.14 on a raft of uninspiring news out of the US and softening global commodity prices.
The eight-day losing streak for Hong Kong shares marks the longest such downturn since 2003, when SARS and Gulf War II were weighing heavily on sentiment.
A Chinese language piece in Sinafinance said a major drag on the Hang Seng today and for much of the week has been the declining fortunes of energy-based firms, as well as just-released worse-than-expected unemployment data from the US.
Crude oil futures on the Nymex fell by nearly 9% on Thursday, breaking through the psychologically-important 100 usd per barrel threshold.
This dragged major upstream oil explorer CNOOC Ltd (HK: 883) down 2.28% today to close at 17.98 hkd.
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Crude oil peer Petrochina Company Ltd (HK: 857) gave up 0.76% to finish at 10.48 hkd.
Lower commodity prices across the board also helped China Shenhua Energy Company Ltd (HK: 1088) lose 1.43% to close at 34.55 hkd, while China Coal Energy Co Ltd (HK: 1898) dropped 0.38% to 10.44.
However, cheaper energy -- especially crude oil -- was of course not all bad news for Hong Kong-listed enterprises, with transportation-related firms some of the biggest beneficiaries.
Airlines, whose overall costs are heavily impacted by fuel prices, were led by Air China Ltd (HK: 753) which leapt 5.8% today to close at 8.39 hkd.
For similar reasons, Hong Kong-based carrier Cathay Pacific (HK: 293) rose 3.2% to 19.9 hkd,
Meanwhile, Shanghai-based China Shipping Development Co Ltd (HK: 1138) jumped 6.8% to 8.30 hkd on expectations of cheaper petrol prices going forward.
Mainland China still relies on coal for around 80% of its electricity generating feedstock, so lower prices for the commodity mean cheaper operating costs for power producers.
China Resources Power Holdings Company Ltd (HK: 836) added 1.0% on the day to finish at 15.82 hkd.
Analysts expect a cautious wait-and-see approach next week as markets await a new raft of economic information to be released by Beijing.
They also say that eyes will be focused on Europe as well, awaiting data on debt financing, payrolls and inflation.
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Sinafinance cited Mark To, Head of Research at Wing Fung Financial Group Ltd, as saying commodities will continue to be a major driver – one way or the other.
“Recently, global commodity prices have come down to earth in a hurry, and have impacted several different sector plays in all markets. But Hong Kong already rose somewhat disproportionately on energy-based plays in mid-April, so today’s energy selloff is natural.
“The index is quite likely to show an upward trend from mid-May on, at which time a series of new companies will be listed on the main board,” Mr. To said.
See also:
HK WEEKLY WRAP: Index Slides 1.7% On Week On Rate Worries
HANG SENG LOSING STEAM: 23,500 New Support Level?