Shanghai stocks end lower, Hong Kong bounces in late trade

Shanghai stocks ended lower Monday on profit-taking after gains late last week, while Hong Kong bounced back from morning losses to finish higher. In Shanghai the benchmark composite index lost 0.82 percent, or 26.36 points, to close at 3,205.99 on turnover of 431.1 billion yuan ($67.5 billion). However, it recovered from morning losses of more than three percent. The Shenzhen Composite Index, which tracks stocks on China’s second exchange, dropped 3.06 percent, or 56.52 points, to 1,790.31 on turnover of 365.4 billion yuan. Hong Kong's Hang Seng Index, which fell almost one percent in the morning, finished up 0.27 percent, or 58.19 points, at 21,670.58 on turnover of HK$94.47 billion ($12.19 billion). Shanghai investors took profits before the release of official manufacturing data, following last week’s volatile trading, dealers said. The market had rebounded in the previous two trading sessions after China cut interest rates to boost the slowing economy, a move also aimed at easing worries which have battered global markets. "Investors took profits today, as the gains in the previous two sessions were quite strong. Investor confidence towards the market still needs to be restored," Haitong Securities analyst Zhang Qi told AFP. Sentiment was also hurt by reports that police had detained several individuals for trading violations including executives from major brokerage Citic Securities. "The news dragged down the prices of heavyweight securities firms," Zhang said. Investors are watching the release of official manufacturing data for August on Tuesday for further clues on market direction. There is also uncertainty about the government's commitment to a rescue package launched after a year-long rally collapsed in June, which has included funding the China Securities Finance Corp. to buy stocks on behalf of the government. "There is a lot of confusion about purchases of stocks by state-linked funds," Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai, told Bloomberg News. "Disclosures are very limited so it is impossible to know what they are doing with certainty." In Shanghai, Citic Securities dropped 4.98 percent to 15.07 yuan while China Merchant Securities gave up 1.30 percent to 15.96 yuan. China Construction Bank edged up 0.58 percent to 5.17 yuan in Shanghai after it reported net profit for the first half rose less than one percent year-on-year to 131.90 billion yuan. Pharmaceutical firms fell. Fengyuan Pharmaceutical dropped by its 10 percent daily limit to 10.08 yuan in Shenzhen while Shenqi Pharmaceutical Investment Management also lost 10 percent to 23.41 yuan in Shanghai.