Shares in Hong Kong and China fell on Monday, with the Shanghai index posting its fourth-straight losing session, as investors took profits on recent outperformers and awaited economic data from China that could give clues on further policy easing.
The broader Hang Seng Index declined 1 percent, while the China Enterprises Index of the top Chinese listings in the territory fell 1.4 percent after surging 6.5 percent last week.
The Shanghai Composite Index lost 1.7 percent,
Turnover slipped 35 and 27 percent from Friday in Shanghai and Hong Kong, respectively, and could stay low going into the long Chinese New Year holiday next week, traders said.
China will release data on Tuesday that is expected to show economic growth moderated further in the fourth quarter to an annual 8.7 percent, according to a Reuters poll. Beijing will also release December industrial output, investment and retail sales figures.
We are waiting for GDP for fresh direction. If it comes in lower than expected, it's going to boost hopes of easing, but any lift from that is likely to be short term, said Jackson Wong, Tanrich Securities' vice-president of equity sales.
The Hang Seng Index finished near the bottom of a narrow 85-point range on Monday, supported at 19,000 after being failing to breach resistance levels of around 19,242 last week.
Its near down-side target is seen at about 18,858, the level at which it closed on Jan. 9 before jumping last week.
PetroChina Co Ltd, which closed at the highest since early August in Hong Kong on Friday, slipped 0.9 percent. CNOOC Ltd declined 1.6 percent, while China Petroleum & Chemical Corp (Sinopec) lost 2.5 percent.
Also weighing on resources stocks were lower commodities prices, on fears that mass sovereign debt rating cuts by Standard & Poor's could further aggravate euro zone funding difficulties and further dampen global growth.
All three Chinese oil majors were key drivers of the Hang Seng Index's strong start to the year, largely on the back of rising oil prices from rising tensions on oil supply associated with Iran sanctions.
Bucking the weaker sentiment on the day was Warren Buffett-backed Chinese automaker BYD Co Ltd.
Its H-share listing rose for a sixth-straight session, jumping 4.8 percent to the highest since Aug. 15 in volume more than three times its 30-day average.
Investors were pouring back into the stock in anticipation that it could benefit from a new policy supporting production of environmentally-friendly cars, analysts said.
OUTPERFOMERS DIVE IN SHANGHAI, TURNOVER AT 2012 LOW
The Shanghai Composite Index closed at 2,206.2, a touch below its 20-day moving average, after breaking below chart support seen at around 2,241 points, its level on Dec. 14 before losses accelerated.
PetroChina and Sinopec were among the top drags in Shanghai, slipping 1.1 percent apiece, but the growth-sensitive materials sector was a standout underperformer, with the Shanghai materials sub-index diving 3.6 percent.
Inner Mongolia Baotou Steel Rare Earth (Group) Hi-Tech Co Ltd (Baotou Steel) slumped 8.4 percent in more than twice its 30-day average volume, halving its gains from last week.
Kweichow Moutai Co Ltd lost 6 percent. It has led a slew of top liquor brands that have been standout outperformers in the last two years while the Shanghai Composite has lost 33 percent.
A-share turnover in Shanghai was at its lowest in 2012 to date, with a spike in China's short-term money market rate to a six-month high suggesting money supply will remain tight heading into the Lunar New Year next week.
Turnover on mainland Chinese bourses fell 23.4 percent in 2011 from 2010, while the number of companies listed rose 13.5 percent over the same period, data from the China Securities Regulatory Commission (CSRC) showed on Monday.
Money supply has been crimped on the mainland partly due to Beijing's tight monetary policy as it tries to rein in inflation. This has in turn made it difficult for companies to raise funds in the mainland, particularly small and medium-sized enterprises.
On Monday, the China securities regulator told the Asian Financial Forum in Hong Kong that there were plans to relax controls on overseas listings for Chinese companies, while pushing for an expansion of yuan-denominated shares in the offshore yuan market in the territory.