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Hot Property? A Shenyang development of China Overseas Land Investment (HK: 688). COLI fell nearly 5% today on new PRC property restrictions.  Photo: COLI

HONG KONG’S BENCHMARK Hang Seng Index shed 3.7% this week, its worst weekly performance since March, closing down 0.3% today to 21,875.38 on global macroeconomic concerns, including whisperings of a US ratings downgrade and Italian debt concerns.

Meanwhile, construction plays helped lift the Shanghai Composite Index today by 0.4%, helping shares rise 0.8% on the week.

A Chinese language piece in Sinafinance said Beijing’s move to further restrict additional home purchases to an expanding list of cities pushed H-share property counters down today.

The Hang Seng’s Property Sub-index led the downward charge, shedding 0.94% today.

Meanwhile, the Financial Sector Sub-index, also heavily weighted with the Hang Seng, fell 0.49% on global economic jitters.

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Bruce Lee's statue watches over Victoria Harbor. Hong Kong shares had a rough week on PRC property restrictions and global economic worries.  Photo: Leong Chan Teik

Moody’s recently sent shockwaves through the PRC and Hong Kong capital markets by publishing a list of dozens of listcos it named as at risk due to auditing and transparency issues.

And now S&P has warned that it may slightly downgrade the United States’ triple-A rating if Congress and the Obama Administration fail to resolve the debate soon over upper limits on the debt.

Meanwhile, adding to the general anxiety in Hong Kong for much of this week has been a series of unsettling reports out of the EU zone about the severity of the Italian debt situation, with some saying that if Europe’s No.3 economy goes south, the EU would be in very dire straits.

And economic regulators' decision to institute more measures to cool runaway property prices in Mainland China – this time in the form of adding to the number of cities with residential unit purchase limits – did nothing to inspire confidence in Hong Kong today.

Bucking the trend today were firms less impacted by property restrictions, including commercial aviation counters, telecom and pharmaceuticals.

China Unicom Hong Kong Ltd (HK: 762) leapt 2.0% today to 15.44 hkd on bargain hunting, while Cathay Pacific Airways Ltd (HK: 293) rose 1.90% to 18.26.

However, selloffs were the name of the game today in Hong Kong, with real estate developers leading the retreat on the newly implemented restrictions on the sector in Mainland China.

China Overseas Land & Investment Ltd (HK: 688) lost 4.85% today to 16.08 hkd, China Resources Land Ltd (HK: 1109) shed 2.91% to 14.68, New World Development Ltd (HK: 17) was down 1.07% at 11.12 and Wharf Holding Ltd (HK: 4) fell 0.91% to 54.3.

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Hong Kong's Hang Seng Index had its worst week since March



Banks didn’t fare much better on global economic concerns about the US and Italy, as well as worries that one of their major customers – property buyers in the PRC – will no longer be requiring many more new loans due to the latest sector restrictions.

China Construction Bank Corp (HK: 939) lost 1.16% today to 5.96 hkd, Bank of Communications Co Ltd (HK: 3328) was down 0.89% at 6.69, Bank of China Ltd (HK: 3988) fell 0.84% to 3.52 and Industrial & Commercial Bank of China Ltd (ICBC; HK: 1398) dropped by 0.71% to 5.6.

“There are still a lot of bargains for the picking when measured by P/E ratios on the exchange. In addition, several blue chips are likely to report healthy first half results and should receive investor attention now rather than later.

“This week has shed a lot of excess value from counters and there are some good buys on the bourse. I see 21,500 as a near-term support level and the Index could challenge 24,000 next month,” Sinafinance cited an analyst at Hong Kong-based Million Rich Securities as saying.

However, analysts say all eyes will be on the world’s biggest economy to see how Washington resolves its debt ceiling limit debate.

See also:

CHINA PRINT POWER, WORLD PRECISION MACHINERY: Latest Happenings...

HK WEEKLY WRAP: Index Up 1.5%, 0.9% Today On H-Shares

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