July 8, 9:31 pm ET Hong Kong stocks seen lower on U.S. fall, Cathay pressured
(UPDATE: Adds details)
HONG KONG, July 9 (Reuters) - Hong Kong stocks were expected to open weaker on Monday, led by technology issues,
after a slew of profit warnings from their overseas peers sent Wall Street sharply lower.
The benchmark Hang Seng Index (^HSI - news) of 33 stocks fell 1.58
percent on Thursday to 12,999.48. The Hong Kong stock market was
closed on Friday due to a severe tropical storm.
On Friday, U.S. markets fell sharply, pressured by a wave of profit warnings from U.S. technology
heavyweights like EMC Corp (NYSE:EMC - news) and Advanced Micro Devices Inc (NYSE:AMD - news).
The warnings dashed hopes that an economic turnaround in the U.S. - Hong Kong's second largest export
market - was near at hand, some analysts said.
``The profit warnings do not bode well for technology stocks worldwide as they signalled that the sector's
recovery remained in doubt,'' said Andrew To, head of research at Tai Fook Securities.
The U.S. Nasdaq Composite Index (^IXIC - news) ended down 3.65 percent to 2,004.16 while the Dow Jones Industrial average (^DJI - news) was off 2.17
percent to 10,252.68, its lowest level in almost three months.
In Hong Kong, blue chip telecom and technology heavyweights like China Mobile and Hutchison Whampoa were expected to come under selling pressure.
Shares of China Mobile, China's largest mobile phone company, ended down 2.4 percent at HK$40.80 on Thursday, and are down four percent so far this year,
but underperforming its rival China Unicom , the mainland's number two cellular operator which is up over 16 percent year to date.
Ports-to-telecom conglomerate Hutchison's stock is down 20 percent since the start of the year. Its shares were down 2.5 percent at HK$77.75 on Thursday.
Dealers said Hutchison stock may also fall on a newspaper report, citing analysts, that the company and its subsidiary, Cheung Kong Infrastructure are likely to
make sizeable provisions on overseas assets in the first half of this year.
The South China Morning Post reported that these assets included Hutchison's 3.1 percent stake in the world's largest mobile operator, Vodafone (quote from
Yahoo! UK & Ireland: VOD.L), and CKI's troubled mainland power plants - both were charged against net profits last year.
Shares of Hong Kong's dominant airline Cathay Pacific Airways are expected to fall after it cancelled more flights due to industrial action by its pilots. Cathay
shares ended down 0.94 percent at HK$10.50 on Thursday.
The airline cancelled 41 flights on Sunday, and 49 out of its scheduled 128 flights on Saturday as a bitter pay and rostering dispute between management and pilots
showed no signs of abating.
The pilots have demanded that Cathay reverse a 1999 pay cut in the wake of the airlines record 2000 profit of HK$5 billion and also addresss concerns over
rostering.
Cathay stock is down 27 percent since the start of the year, making it one of the worst performing Hang Seng Index components.
Some of the China shares listed in Hong Kong, however, may post modest gains on hopes that Beijing could win the bid for the Olympic Games in 2008.
The International Olympic Committee will vote on July 13 to choose the venue for the 2008 Games. Beijing is widely seen as the frontrunner. |
