Hong Kong shares snap losing streak

Hong Kong shares snapped a seven-day losing streak Monday as banks led a late rally, setting up the benchmark for a possible bounce from oversold conditions if inflation data from China today comes in better than expected. Property developers remained weak, however, capping gains, after the Hong Kong government on Friday announced more measures aimed at reining in surging property prices in the territory. The Hang Seng Index closed up 0.4 per cent, recovering from earlier losses after finding support close to its March low of 22,123.3, a level traders say could provide a floor for the market. It had lost more than five per cent over the previous seven sessions, with its relative strength index nearing the threshold mark of 30 which denotes a security is technically oversold. Turnover remained weak, however, falling to its lowest this month, as market players resisted from making big bets ahead of Chinese inflation data. Article continues below Analysts expect inflation edged up to 5.4 per cent in May, according to a Reuters poll. Policy tightening A weaker reading could ease fears of prolonged policy tightening by Beijing, fears which have dogged Chinese markets for more than a year, while a higher number could sap investor confidence. China's annual inflation rate in June may accelerate to more than 6 per cent, which could bring the full-year consumer price index for 2011 to as high as 5 per cent, a government researcher said. Banking shares, which had seen a steady pickup in short-selling over uncertainty surrounding local government debt and capital requirements, rose as low valuations drew in investors. Shares of top mortgage lender China Construction Bank advanced 1.6 per cent, providing the biggest boost to the benchmark. CCB shares trade at a 38 per cent discount to their historical forward 12-month earnings multiple, according to Thomson Reuters Starmine. Property Property shares extended losses, however, keeping the broader market's gains in check. The latest round of Hong Kong government measures could weigh on developers' home sales, said Alan Lam, greater China analyst at Julius Baer. Hong Kong on Friday unveiled its fourth package of measures since October 2009 to curb runaway property prices, increasing the supply of land available to build homes and tightening mortgage restrictions. The property sector sub-index fell 0.3 per cent. Industry bellwether Sun Hung Kai Properties Ltd fell 0.7 per cent while Sino Land dropped 1.7 per cent. Mining tax Citic Pacific fell 5.8 per cent to its lowest close this year, bringing its two-day loss to nearly 10 per cent over concerns that Australia's contentious mining tax will impede its large iron ore operations in the country. China's main stock index ended down 0.2 per cent after losingmore than 1 per cent in the morning session, but investors remained wary ahead of today's inflation data.