Hong Kong stocks rise slightly on Monday morning
Monday, May 29, 2000
REUTERS
Updated at 1.11pm: Hong Kong stocks rose slightly on Monday morning after losing ground in early trade. The Hang Seng index closed the session 0.31%, or 42.6 points, higher at 13,765.3.
Short-covering ahead of the expiry of the May futures contract on Tuesday supported the market along with some bargain hunting after heavy share losses last week, but tech counters remained under pressure and volume was extremely thin because the US market will be closed for a holiday on Monday.
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Turnover totaled a meager $3.708 billion, compared to $5.215 billion on Friday, with declines outpacing advances 313 to 210.
''The market's moving sideways with no direction because there is no trade in New York today,'' said Jason Tang, a trader at South China Securities. ''Investors are still worried about higher interest rates but a lot of that has already been reflected in last week's losses.''
The New York and London markets are both closed on Monday because of public holidays.
Some analysts expect trade to be quiet all this week as many investors await the release of US unemployment data on Friday.
Some reports say the data will show US unemployment still at a 30-year low in April, which would indicate that inflation remains a threat to the economy and point to a bigger than expected half per centage point increase in interest rates next month.
Hong Kong almost always follows US rate rises because of its currency peg to the dollar.
HSI benchmark China Telecom kept the market in positive territory in morning trade, jumping 3.48% to $50.5.
''China Telecom and HSBC seem to be attracting short covering ahead of settlement of the May futures contract tomorrow,'' said Y K Chan, head of research at CEF Securities.
Banking giant HSBC gained 0.6% to $83.75. China Telecom was also helped by the fact that investors appeared to have discounted rival China Unicom's much lower listing price.
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A Hong Kong newspaper reported on Monday that Unicom shares, due to start trade in Hong Kong and New York next month, would be priced at between $11.5 and $14.5.
''In the last couple of weeks we've seen quite a lot of selling of China Telecom by investors who want to raise funds to buy Unicom,'' said Frederick Tsang, research director at China Everbright Securities. ''Most of that may be over because now they have to make a decision on how much to commit to Unicom.''
China Unicom's international roadshow ahead of the listing starts today.
Selling pressure on Hutchison Whampoa had also eased as the stock declined just 0.91% to $81.25.
Hutchison was sold heavily last week on the weakness of tech stocks and arbitrage trade as investors sold the telecom conglomerate to buy its more cheaply-priced parent Cheung Kong Holdings.
''The price gap between Hutchison and Cheung Kong has narrowed significantly in the past week so people can't sell Hutchison for Cheung Kong so much now,'' Mr Tsang said.
Property developer Cheung Kong fell 1.06% to $69.75 as institutional investors continued to switch their property exposure from Cheung Kong to Henderson Land. Henderson is to be included in Morgan Stanley Capital International's Hong Kong index, a portfolio benchmark for fund managers, from Thursday. Cheung Kong will be removed.
Henderson Land jumped 5.5% in the morning to $30.7.
Overall, however, property stocks remained under pressure after data released over the weekend showed residential property transactions in May were at their lowest level since October 1998. The Hang Seng property sub-index fell 1.28% to 12,131.84.
Developer Sun Hung Kai Properties, which along with Henderson Land, has most exposure to the residential sector, bore the brunt of selling, falling 4.05% to $42.6.
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The technology sector continued to draw selling with Internet-related stocks coming under heavy pressure as investors continue to be concerned about their earnings prospects.
Losers included Next Media, which fell 7.22% to $0.90.
The dotcom heavy Growth Enterprise Market dived 6.86% to 459.3 as investors become increasingly nervous that small Internet companies may not be able to survive.
''Internet-related companies engaged in the Internet content provider business have extremely high failure rate and have very low barriers of entry,'' warned Stanley Ng, research analyst at Mansion House Research, in a report on Monday.
Internet heavyweight Pacific Century CyberWorks gained 2.61% to $13.75 on confidence that its takeover of Cable & Wireless HKT will proceed after C&W HKT said last week it approved the merger.
''Turnover in PCCW is low though,'' Mr Tsang said. ''Investors don't need to make a decision on whether to buy or sell these counters on the merger for a few weeks so they'll wait until a clearer pattern emerges on the direction of Nasdaq.'' C&W HKT shareholders will vote on the merger on July 3.
C&W HKT shares ended unchanged at $16.80.
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China related H-shares and red chips were mixed in morning trade. The H-share index gained 1.06% to 378.97, pushed higher by oil producer PetroChina, which continued its rebound from recent profit taking. It rose 4.14% to $1.51. The red chip index fell 0.23% to 1,072.92.
Losers included Founder Holdings, down 9.49% to $3.10. The company announced a $223.07 million net loss for 1999 last week.
Analysts expect the market to remain in a narrow range this afternoon, although short covering may push it slightly higher.
''The market may hold above 13,800 this afternoon but below 14,000,'' CEF Securities' Mr Chan said. |
