China petrochemical shares helped to lift the China enterprise stocks index after Asia's top refiner Sinopec said it would privatise China's largest oil refinery.
The blue chip Hang Seng Index ended 0.03 percent, or 4.11 points, higher at 14,601.59. But volume was below recent averages with HK$14.9 billion ($1.9 billion) worth of shares exchanged. The Hang Seng properties sub index fell 0.42 percent after Hong Kong banks lifted interest rates by 50 basis points, eclipsing a 25 basis point rate rise by the US Federal Reserve earlier in the week.
Sino Land Co Ltd was among the worst performers, falling 1.15 percent to HK$8.60. But recent property laggards such as Henderson Land Co Ltd mustered gains.
Henderson Land rose 1.02 percent to HK$34.80.
"The property market and property stocks will trend lower in the coming months because of further rate hikes. The scenario we are predicting now is that property companies may report lower earnings and banks may downgrade the property sector," said Alex Tang, research director at Core Pacific Yamaichi.
Tang said the dampening effect on the property market, a pillar of Hong Kong's economy, would likely also lead to weaker consumer spending in coming months.
He said banks were one of the few bright spots for the Hong Kong market, thanks to higher interest income expectations.
Global bank and Hang Seng heavyweight HSBC Holdings Plc ended 0.16 percent higher at HK$122.40, its highest level in three weeks. China's top PC maker Lenovo Group Ltd was the biggest blue chip loser, slumping 4.9 percent to HK$3.40.
Merrill Lynch on Wednesday downgraded the firm's profit outlook after it reported weaker-than-expected margins in its fiscal second quarter.
Sourcing and trading firm Li & Fung Ltd was a top performer, gaining 3.25 percent to HK$17.45, as investors eyed recent laggards and Asian export stocks on the back of a strengthening US dollar.
Global retailer Esprit Holdings rose 2.06 percent to HK$56.95 after as dealers eyed signs of a stronger euro currency ahead of a European Central Bank meeting on interest rates. The bulk of Esprit's revenues come from Europe.
Cathay Pacific Airways climbed 1.54 percent to HK$13.15, extending gains earlier this week on weakening fuel prices. China petrochemical firms were among the top performers after sources said Asia's top refiner Sinopec Corp would pay up to US $1.02 billion to take private its majority-owned Sinopec Zhenhai Refining & Chemical Co Ltd Zhenhai Refining shares were suspended from trade. But Sinopec units Shanghai Petrochemical and Yizheng Petrochemical surged 6.06 percent to HK$2.62 and 7.09 percent to HK$1.36, respectively.
Sinopec rose 1.5 percent to HK$3.32, helping to lift China enterprise stocks.
China enterprise stocks, or H-shares rose 0.66 percent to 4,920.50.