The Hang Seng Index fell 0.6 per cent to 25,460.16 at the noon break. The Hang Seng Tech Index slid 1.8 per cent.
A solid run among the mainland’s yuan-denominated stocks hit a snag as the CSI 300 Index slipped 0.9 per cent and the Shanghai Composite Index retreated 0.8 per cent.
Optimism that Hong Kong stocks will catch up with their mainland counterparts fueled a gain of more than 2 per cent in the Hang Seng Index on Monday. The city’s stocks are now cheaper than the mainland’s on a price-to-earnings ratio basis after a key gauge of onshore stocks rose to a decade high last month. Expectations that the Federal Reserve will cut borrowing costs later this month have also boosted sentiment for Hong Kong stocks.
“The near-term upside potential for the Hong Kong market might be smaller compared to the A-share market, as [a recovering] valuation in the offshore market might catalyse increased fundraising activities by the listed companies, stock selling by major shareholders and management, as well as trigger profit-taking from foreign investors,” said Edith Qian, an analyst at CGS International in Hong Kong.
