Interesting Note on PCCW: HK Shrs End Sharply Up; Helped By Futures Short-Covering
HONG KONG (Dow Jones)--After an 8%-plus correction in the past four trading days, Hong Kong shares staged a strong rebound Friday on the back of the biggest-ever point gain on Wall Street overnight and improving regional sentiment.
As in the previous session, the bulk of trading activity took place in the final hour before closing.
Contrasting Thursday's heavy late-day selloff, funds poured back into the so-called "old economy" banking and property stocks late afternoon Friday. But mindful of the upcoming Taiwan presidential election results, many investors stayed sidelined, such that the day's trading turned in the weakest volume for the year, market participants said.
After a 2% gain at the open, the benchmark Hang Seng Index traded in a narrow 200-point range, but soared in the last trading hour to close the day up 4.4%, or 723.99 points, to 17082.99.
"The last hour sweeping buys were also partly because of a flurry of short-covering activities in the futures market," said Steven Leung, senior vice president for equity sales at Daiwa Securities.
Hang Seng March futures contracts ended the day up 1080 points at 17310, or at a 227-point premium to the cash index.
The broader All-Ordinaries Index added 4.1% to 7355.56. Trading volume was valued at HK$12.36 billion, the lowest volume recorded for the year.
The Dow Jones Industrial Average added 499.19 points Thursday - its biggest point gain ever - to 10630.60. Nasdaq climbed 134.77 points to 4717.39.
Despite the sharp rebound in the Nasdaq Composite index, technology stocks posted lower-than-expected gains following Pacific Century CyberWorks' share suspension. Tech counters usually track CyberWorks shares.
CyberWorks shares were suspended from trading pending a company announcement to clarify an inaccurate press report.
China Telecom surged 7.2% to $67.25. HSBC Holdings added 4.7% to $90.
Bk Of East Asia +10%; New World +7%
Among the "old economy" stocks that attracted buying were Bank of East Asia, which added 10%, or HK$1.70, to HK$18.65. This made the stock the biggest blue-chip advancer in the day, although it is still off its February high at $21.80.
New World Development gained 7%, or 75 HK cents, to HK$11.40. A trader noted there were strong buy orders from London in the final trading hour for the two stocks.
But overall volume is shrinking because many investment funds are tallying their gains towards the end of the first quarter, a fund manager said, adding that volume will likely pick up in April.
And more imminent is Saturday's Taiwan presidential election. Traders said there is strong conviction in the markets that cross-straits relationship will sour if pro-democratic candidate Chen Shui-bian wins. This has sent Hong Kong stocks lower.
"I see the Hang Seng moving up or down 500 points Monday, depending on whether Chen wins or not," said Antony Mak, sales director at Vicker Ballas.
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