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Hong Kong Stocks May Reverse Gains

(RTTNews) – The Hong Kong stock market on Monday snapped the three-day losing streak in which it had given away nearly 400 points or 1.8 percent along the way. The Hang Seng Index finished just shy of the 21,600-point plateau, but now investors are bracing for a modest decline when the market opens for business on Tuesday.

The global forecast for the Asian markets is mildly pessimistic, thanks to an easing in commodity prices – although solid corporate earnings are likely to limit the downside. The European markets finished firmly higher, while the U.S. bourses ended mixed but little changed – and the Asian markets are expected to follow the latter lead.

The Hang Seng finished sharply higher on Monday, thanks to a surge among the property stocks, retailers and energy companies.

For the day, the index jumped 342.57 points or 1.61 percent to finish at 21,587.06 after trading between 21,489.05 and 21,617.85 on turnover of 56.69 billion Hong Kong dollars.

Among the gainers, Yanzhou Coal Mining surged 7.17 percent, while China Coal Energy added 2.87 percent, China Shenhua Energy gained 2.76 percent, Li Ning spiked 6.68 percent, Anta Sports jumped 5.52 percent, Gome climbed 3.04 percent, Henderson Land collected 4.27 percent, China Resources Land was up 1.98 percent and Sun Hung Kai Properties added 1.70 percent.

The lead from Wall Street is flat with a touch of weakness as stocks ended Monday’s session mostly lower with traders cashing in some recent gains in the equity markets. A continued strong performance by corporations on the earnings front led by Caterpillar (CAT) helped to limit the downside on the day.

Construction equipment provider Caterpillar Inc. spearheaded the day’s earnings, reporting first-quarter profit of $0.36 per share, compared to a loss of $0.19 per share recorded in the same period last year. Adjusted profits, excluding items, were $0.50 per share, up from $0.39 per share in the year-ago quarter. Wall Street analysts had predicted the company would report earnings of $0.39 per share for the quarter. Quarterly revenues declined to $8.24 billion, from $9.23 billion in the year ago quarter and fell short of estimates, which called for $8.84 billion for the period.

Humana Inc.’s (HUM) first-quarter net income came in at $1.52 per share, firmly beating estimates for $1.14 for the quarter. Revenues for the first quarter rose 9.5 percent to $8.44 billion from $7.71 billion in the comparable period, topping projections for $8.27 billion for the quarter.

Whirlpool Corp. (WHR) saw a first-quarter income of $2.13 per share, exceeding expectations for $1.33 per share. Net sales grew to $4.27 billion, comfortably besting consensus estimates for $3.79 billion.

Also on the corporate front, Emerson Electric (EMR) announced a purchase offer for UK firm Chloride Group PLC in the amount of $1.1 billion.

In other news, the Treasury Department said it will provide Morgan Stanley (MS), the Treasury’s sales agent, direction to sell up to 1.5 billion shares of Citigroup (C) common stock, reducing the government’s 27 percent stake in the firm.

The Dow inched up by 0.75 points or less than a tenth of a percent to 11,205.03, while the NASDAQ dipped by 7.20 points or 0.3 percent to 2,522.95 and the S&P 500 slid by 5.23 points or 0.4 percent to 1,212.05.

In economic news, Hong Kong is on Tuesday set to announce March numbers for imports, exports and trade balance. Imports are called higher by 27.9 percent on year following the 22.4 percent annual expansion in February. Exports are tipped to rise 25.2 percent on year after the 28.5 percent annual increase in the previous month. The trade balance is expected to reflect a deficit of 27.8 billion Hong Kong dollars after the 19.7 million HKD shortfall a month earlier.

Also, the Hong Kong Monetary Authority said on Monday that the new mortgage loans drawn down increased 60.3 percent on a monthly basis in March, compared to the 1.5 percent fall in the previous month. The value of new mortgage loans drown down amounted to HK$27.4 billion in March, up from HK$17.1 billion in the previous month.

In corporate news, China BAK Battery reported a net loss for the second quarter of $2.5 million or $0.04 per share, compared to a net loss of $5.7 million or $0.10 per share in the same quarter last year. Net revenues for the second quarter were $50.4 million, up from $40.8 million in the previous year quarter.

Also, China Security & Surveillance Technology reported an increase in first quarter profit as revenues improved on brisk demand for its products and services in China. Net income of the China-based company improved to $3.28 million or $0.05 per share from $2.00 million or $0.04 per share in the same quarter a year ago.

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