RTTNews - The Hong Kong stock market on Monday saw its losing streak extend to three sessions, costing it more than 525 points or 2.5 percent in the process. The Hang Seng Index fell through the key 20,000-point support plateau, and now analysts predict that the market could see more pressure at the opening of trade on Tuesday - although it is most likely to follow China's lead.
The global forecast for the Asian markets remains solidly pessimistic after most of the markets saw heavy losses in Monday's trade. Resource stocks are expected to remain under pressure following a fall in commodity prices, while airlines, properties and financials also could see significant losses. The European and U.S. markets finished broadly negative, and the Asian markets are also tipped to move to the downside.
The Hang Seng finished sharply lower on Monday, as shares from the mainland weighed heavily on investors. Financials fell under heavy selling pressure throughout the session, while the oil stocks also ended lower.
For the day, the index plunged 374.43 points or 1.86 percent to finish at 19,724.19 after trading between 19,592.07 and 19,827.13 on turnover of 67.32 billion Hong Kong dollars.
Among the decliners, HSBC Holdings shed 1.14 percent, while CNOOC lost 1.74 percent, Sinopec was down 3 percent, PetroChina fell 2.84 percent and Great Wall Motor plunged 5.38 percent.
Finishing higher, Denway Motors added 1.77 percent, while Dongfeng Motor Group Co gained 1.39 percent, Sinotruk (Hong Kong) jumped 3.22 percent and BYD Co surged 8 percent.
The lead from Wall Street is firmly negative as stocks remained mostly negative throughout the trading day on Monday after moving sharply lower in early trading. While the major averages did not see much follow-through on their initial downward move, they remained stuck in the red.
The weakness in the markets came as a sell-off in the Chinese stock market inspired some traders to cash in on recent strength. Nonetheless, selling pressure remained relatively subdued ahead of the release of some key economic data later this week.
Traders largely shrugged off the results of the Institute for Supply Management - Chicago's survey of regional manufacturing activity, which showed that activity unexpectedly reached neutral territory in August following ten consecutive months of contraction. The index of manufacturing activity rose to 50.0 in August from 43.4 in July, with a reading of 50 acting as the breakeven point versus contraction and expansion. Economists had been expecting a more modest increase to a reading of 48.0.
In corporate news, Walt Disney (DIS) announced that it has agreed to acquire Marvel Entertainment (MVL) in a stock and cash transaction. Marvel shareholders will receive a total of $30 per share in cash plus approximately 0.745 Disney shares for each Marvel share they own.
The major averages moved well off their lows going into the close, although they still ended the day firmly in negative territory. The Dow closed down by 47.92 points or 0.5 percent at 9,496.28, the NASDAQ fell by 19.71 points or 1 percent to 2,009.06 and the S&P 500 slipped by 8.31 points or 0.8 percent to close at 1,020.62.
In economic news, Hong Kong will on Tuesday announce retail sales data for July. Sales by value are expected to decline 6.5 percent on year after the 4.8 percent annual contraction in June. By volume, sales are called lower by 5.8 percent on year following the 4.2 percent annual fall in the previous month.
In corporate news, Sina Corp., an online media company and information service provider, on Monday reported a sharp decline in its second quarter profit, absent a gain recorded in the prior year quarter and on lower margins. Revenues dropped marginally, hurt by weak advertising revenues. Earnings, however, came in line, while revenues beat forecast. Looking ahead, Sina said it expects third quarter revenues below Street estimates.
For the second quarter, net income of the Shanghai, China-based company plunged 41 percent to $13.34 million or $0.23 per share from $22.54 million or $0.37 per share in the same quarter last year. On a non-GAAP basis, net income totaled $17.12 million or $0.29 per share, compared to $23.52 million or $0.39 per share in the year-earlier quarter.
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