Hong Kong, China stocks close lower; coal sector rallies amid merger talks

Hong Kong shares closed lower on Monday, as investors moved to the sidelines following sharp gains the prior week, while the coal sector advanced amid merger talks between two major Chinese energy giants.

Analysts also cited concerns over the latest round of terrorist attacks in London and uncertainties this may have on UK national elections scheduled for later this week.

The Hang Seng Index lost 0.24 per cent to close at 25,862.99. The Hang Seng China Enterprises Index also fell, shedding 0.65 per cent to 10,597.05.

Louis Tse Ming-kwong, managing director of VC Asset Management in Hong Kong, said the London terror attack during the weekend could have contributed to the drop, but added that the market is usually more volatile nearing the level of 26,000.

“The movement of the HSI is still within a tight range, it will not affect the bigger uptrend,” Tse said.

He said the market is currently undergoing “a short span of consolidation” given strong gains last week. Tse said he believes there is still potential for the HSI to reach 26,000 this week, but added that the market will also focus on uncertainties ahead of the UK general elections on Thursday.