Mainland Companies Weigh Hong Kong to 2% Decline

The Hang Seng Index fell 2.1% to close at 21,405.17 on April 19, in main board trading volume of HK$76.52 billion. The Hang Seng China Enterprises Index, which tracks mainland-based companies listed in Hong Kong, fell 2.42%.

Real estate developers with mainland China projects weighed heavily on the index, after China's State Council announced that banks may refuse mortgages to prospective home buyers that already own two homes. China Resources Land (1109.HK) declined 5.5%, while Sino-Ocean China Overseas Land & Investment (0688.HK) lost 3.74% and Sun Hung Kai Properties (0016.HK) fell 2.73%.

China Construction Bank (0939.HK, 601939.SH) fell 2.28%. Rumors said that the bank is planning a rights issue on both the A- and H-shares markets, Caing.com reports citing an unnamed source. China Merchants Banks (3968.HK, 600036.SH) backed down 3.02%, Industrial and Commercial Bank of China (ICBC) (1398.HK, 601398.SH) declined 2.15% and HSBC (NYSE:HBC, LON:HSBA, 0005.HK) slumped 3.19%.

Shares of oil companies weakened as oil prices fell on the international market, cnfol.com reports. China National Offshore Oil Corporation (CNOOC) (NYSE:CEO, 0883.HK) dropped 3.86%. China Petroleum & Chemical Corporation (Sinopec) (NYSE:SNP, 0386.HK, 600028.SH) and PetroChina (NYSE:PTR, 0857.HK, 601857.SH) lost 3.5% and 3.29%, respectively.

French cosmetic retailer L'Occitane is planning an initial public offering on the Hong Kong Exchange, and expects to receive $50 million investment from China's sovereign wealth fund, China Investment Corporation, Reuters reported April 19 quoting L'Occitane. Sources over the weekend said that L'Occitane plans to raise up to $708 million through the listing and become the first French company to list in Hong Kong, said the report.