Market Highlights

Despite overnight weakness on Wall Street, the Hong Kong market maintained its upward momentum during the morning session yesterday. Nonetheless, the market reversed earlier gains in the afternoon as losses on the A-share market widened. The HSI and the HSCEI finally ended the day with losses of 70 points (0.3%) and 13 points (0.1%) respectively with market turnover falling back to HK$58.3b.

    Investors took profit on previously highflying sectors such as technology and Macau gaming counters. Kingsoft (03888.HK, HK$22.95) tumbled 11.6% after the company reported that its first quarter profit growth slowed to 26% YoY compared with 124% YoY during the same period last year. The IPO valuation in the US for Cheetah Mobile, owned 48% by Kingsoft, has also been lower than expected. Tencent (00700.HK, HK$109.8). Lenovo (00992.HK, HK$9.60) and SMIC (00981.HK, HK$0.64) also fell 3.1%, 2.4% and 1.5% respectively. Sell-off in Macau gaming counters continued, led by Galaxy Entertainment (00027.HK, HK$59.2), Sand China (01928.HK, HK$55.9) and MGM China (02282.HK, HK$26.35) which fell 3.0%, 2.0% and 2.0% respectively. On the other hand, investors were switching towards recent laggards such as China insurers. CPIC (02601.HK, HK$25.65), China Life (02628.HK, HK$21.15) and Ping An (02318.HK, HK$58.85) rose 1.8%, 1.0% and 0.2% respectively.

    The US market rose to another record high last night as lower than expected first quarter GDP figures mean that interest rates will stay low for a considerable period of time. The Hong Kong market may consolidate sideways near term.