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Hong Kong stocks close flat, Shanghai slips

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(Globalpost/GlobalPost)

Hong Kong stocks ended virtually flat on Monday while Shanghai slipped owing to growing fears over a new bird flu outbreak on the mainland.

The benchmark Hang Seng Index eased 8.85 points to end at 21,718.05 on turnover of HK$58.05 billion ($7.49 billion).

The market had seen an early rebound after suffering a big sell-off on Friday on news of the bird flu, which has now infected 21 people of whom six have died.

"Bird flu will certainly be a major factor affecting the market and sentiment may only stabilise after China finds a solution to it," BOC International analyst Shen Jun told AFP.

The lead from Wall Street was weak after the US Labor Department reported the economy added only 88,000 non-farm jobs in March, a third of the February gain and the slowest growth in nine months. The figure was well below the average estimate of 192,000.

The Dow fell 0.28 percent Friday and the S&P 500 slid 0.43 percent, while the Nasdaq shed 0.65 percent.

KGI Asia chief operating officer Ben Kwong said dealers would be looking to the release Tuesday of Chinese inflation data for clues to future policy direction, with a high figure raising the likelihood of more tightening.

Despite a sell-off in Shanghai, airline stocks in Hong Kong rebounded from heavy losses last week.

Air China rallied 4.5 percent to HK$6.32, recovering some of its 9.8 percent loss Friday caused by a sector selloff over the bird flu scare.

China Southern Airlines rebounded 3.4 percent to HK$4.00 after taking a 8.5 percent beating Friday, while China Eastern Airlines rose 2.9 percent to HK$3.19 after falling 8.3 percent.

Cathay Pacific rallied 4.1% to HK$12.78 after closing down 4.1% Friday.

But Hong Kong developers mostly fell because of weak activity in the property market. Henderson Land shed 1.0 percent to HK$52.50 and New World Development declined 1.2 percent to HK$12.60.

Chinese shares closed down 0.62 percent. The benchmark Shanghai Composite Index fell 13.71 points to 2,211.59 on turnover of 73.7 billion yuan ($11.9 billion).

Hotel and tourism shares led the declines on worries their business will be hurt.

Hotel operator Shanghai Jinjiang International Hotels Development slumped 5.21 percent to 12.20 yuan, while Nanjing-based tourism agency China United Travel lost 3.38 percent to 3.72 yuan.

Shanghai-listed airlines also fell, with flag carrier Air China losing 3.38 percent to 5.15 yuan and China Eastern Airlines falling 3.23 percent to 3.00 yuan.

Food companies were hit by concern over food safety. Meat processor Shanghai Dajiang Food dropped 1.81 percent to 3.80 yuan while canned meat producer Shanghai Maling Aquarius slid 0.79 percent to 7.52 yuan.

Medical shares bucked the trend on hopes the outbreak will boost sales. Shandong Lukang Pharmaceutical rose nearly 10 percent to 5.97 yuan, while Jiangsu Hengrui Medicine jumped 3.27 percent to 31.90 yuan.

Capital Securities analyst Amy Lin said: "We think the decline is a knee-jerk reaction and the market may over-react a bit over the (outbreak) of the bird flu."

Lin told Dow Jones Newswires it was too early to assess the full impact of the new avian flu strain.

dan/sm

http://www.globalpost.com/dispatch/news/afp/130408/hong-kong-stocks-close-flat-shanghai-slips