HONG KONG'S benchmark Hang Seng Index fell 1.7% this week, and 0.36% on Friday, to finish at 23,720.81 amid ongoing worries that Beijing may implement further credit-tightening moves. Analysts expect this sentiment to continue in the upcoming holiday-shortened week.
Meanwhile, shares in the PRC ended 0.85% higher on bargain hunting after the benchmark Shanghai Composite Index lost 4.6% on the week, to close Friday at 2,911.51.
Today's loss in Hong Kong was the fourth consecutive losing session. In a Chinese language piece in Sinafinance, investors are apparently worried that this weekend will bring another rate hike or reserve requirement ratio (RRR) uptick announcement from the People's Bank of China (PBOC), the country's central bank.
Investors believe this weekend has all the trademarks of a credit-tightening opportunity for the PBOC as markets in both Hong Kong and Mainland China will be closed on Monday in observance of Labor Day.
The markets are no stranger to credit tightening of late.
The PBOC has hiked the prime lending rate four times in the past six months, while also raising the RRR seven times, all in an attempt to control spiraling inflation, especially for fast-rising food costs which Beijing fears are potentially destabilizing for social order.
Analysts were also cited as saying sentiment in Hong Kong has not only been hit by worries over a tightening lending environment in the Mainland, but also by fears that foreign funds will be outflowing from the Special Administrative Region’s capital markets on the anxiety.
The usual suspects, real estate developers, took the brunt of the bearishness, as they are some of the most vulnerable enterprises to more expensive bank credit.
The first yuan-denominated IPO outside of Mainland China to list in Hong Kong -- Hui Xian Real Estate Investment Trust (HK: 87001), whose largest shareholder is Hong Kong property mogul Li Ka-Shing – picked a poor day to go public, falling 9.4% to 4.75 yuan from its 5.24 yuan IPO price on its debut Friday.
China Overseas Land and Investment Ltd (HK: 688) fell 1.3% today to 14.94 hkd while peer developer China Resources Land Ltd (HK: 1109) shed 1.9% to finish Friday at 13.40.
Listed power producers helped the Hang Seng stop the bleeding as they responded to expected electricity tariff hikes in China.
China Resources Power Holdings Company Ltd (HK: 836) rose 2.0% today to close at 14.30 hkd.
See also: HONG KONG Shares Afire On Hot Industrials
