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Hong Kong and Shanghai markets lower

Thursday, June 14 07:13:52

Hong Kong shares fell today, led by losses in the retail sector, as more weak U.S. economic data and the Greek election this weekend gave risk-averse investors little reason to make big bets. The Hang Seng index drifted lower to end the morning session down 0.5 percent. The China Enterprises index fell 0.7 percent, with cement producers among the top losers. Mainland markets fared slightly better with the Shanghai Composite down 0.3 percent and the large-cap focused CSI300 flat, largely due to Chinese liquor makers rebounding from profit-taking earlier this week.

Greeks pulled their cash out of banks and stocked up with food ahead of a cliffhanger election on Sunday that many citizens fear will result in the country being forced out of the euro. "The volumes today speak to how people are approaching this weekend," said a Hong Kong-based trader at an American brokerage. "I would also caution that the time lines for any serious reform is still years away and the immediate risks are still very palpable," the trader said. Trading volumes in Hong Kong have fallen to levels last seen at the depths of the financial crisis in late 2008, following a short-lived pick-up in activity in the first quarter as markets rallied.

Average daily turnover on the Hong Kong exchange is now threatening to fall below $6 billion a day, something that has happened only twice since the financial crisis. Average daily turnover since the start of 2008 is around $8.6 billion, according to Thomson Reuters data. On Thursday, the most actively traded stock by far was European retailer Esprit Holdings which lost another 10.3 percent in over 6 times its 30-day average daily traded volume. The resignation of the company's chairman a day after the chief executive quit has spooked investors who have rushed for the exits, slashing the company's market value by about a third since Tuesday. Despite the sharp drop, the shares are still trading about 25 percent above the intra-day lows seen last September.

Elsewhere in the retail sector, consumer goods exporter Li & Fung fell 1.8 percent on expectations of weak demand from U.S. retailers. Compounding weakening demand from the West, Chinese companies are likely to remain under pressure from a slowdown in China, according to Credit Suisse. ( C) Reuters