Quam Views QuamSwer Tony's Portfolio
Daily Quomments
15 Sep ,2000
Pacific Century CyberWorks, #8, again led the rout as the HSI lost a further 234 points to 16,395. In a slightly more active day, with prices falling from 16,623 to 16,323, in a turnover of $10.5 billion, the market is getting the appearance of being oversold.
PCCW is due for a bounce, as yesterday not only tired holders but also aggressive short-sellers took to the screens with the vengeance of Pokemon leaving a declared short position of $160 million, although that is not necessarily a reliable indication. Cable and Wireless are desperate to sell PCCW, and there had been a rumour earlier that they were prepared to undercut prices in order to get volume, but that appears to have recoiled on themselves. This desperation had been seen earlier in their desertion of Hongkong Telecoms despite its having previously been the source of 60% of its revenue.
Cable and Wireless in fact rose yesterday, though not to give any degree of comfort, and, in US terms, is now at US$49 after having traded at US$75 during March, but it is still well clear of its US$40 which was its support in May. At this point Cable and Wireless is valued at about HK$310 billion, whilst PCCW, at $11.50 is valued at HK$245 billion, so the Cable and Wireless shares in PCCW are extremely significant to their own share price, and this itself must be looking very vulnerable.
PCCW has been slaughtered, although its previous prices were an act of levitation hardly ever before been witnessed on the magical stage of conjuring. When they adopted the symbol of HKT, the number 8, they had opened at $16, and within the first month they are now down to $11.50, a loss of $4.50, or 28%, and during the past week there has been relentless selling. We would anticipate a rally as a reaction to the over-aggressive sales but we doubt that this can comfortably ensure a level of $12.50 to $13, at which we cannot see any justification to remaining invested in this company.
But this has also affected China Mobile, #941, as this also has been caught in the maelstrom and yesterday was down by another $1 to $57.25. Even assuming a profit for 2000 at about 4 times the recorded profit for 1999, the PE of China Mobile would still be over 40 times. This company is not guaranteed plain sailing as they will need to contend not only with competitors, and China Unicom is at the moment more of a toothless dragon but it could be injected with fire should the gods deem it to be worthwhile, as with technological development, as technology does not stand still, even for MTR's prospectus is deliberately being withheld from the public¡¦s view as the Hong Kong government is scared that were it to be published it would arouse so much criticism as to scotch the listing. Either that or the Hong Kong government thinks that the Hong Kong public is so immature and gullible that they do not know or care what they are being offered provided it is offered with sufficient incentives and discounts.
We would recommend any of our readers to be extremely cautious about subscribing to this issue because of this reluctance, which by implication makes it appear to be severely flawed.
Sinopec is also due to be floated next month, and it would therefore be worthwhile to reserve capital to invest in this new mammoth listing. These shares are being snapped up by the majors in the industry, and there could even be a shortage in the allocations made to the Hong Kong public.
The pace of the decline had only a marginal let-up yesterday as declines outweighed advances by 483 to 144. Once again we are left to wonder whether this was a climactic sale, but we are compelled to realise that without the heavier volume it is not yet a climax. China Mobile, as well as some of the other heavyweights are not at comfortable prices, and could well slip lower, after a rally.
China shares all migrated southwards. The red chips index lost 30 points to 1,242, with ex-HSI constituent Guangdong Invest, #270, leading it downwards with a 15 cents fell to 81 cents. The next stage of its consolidation is now published, and is summarised elsewhere on these pages. China Travel, #308, down 7 to $1.09, and Cosco Int'l, #517, down 13 cents to 89 cents, together with Cosco Pacific, #1199, down 35 cents to $6.05, Denway Motors, #203, down 11 to $1.03, were among the bigger losers. H shares were only down 2 to 463, with the airline stocks, China Eastern Air, #670 down 9 cents to $1.05 and China Southern Air, #1055, down 14 cents to $1.82 heading the retreat. On the mainland A shares in Shanghai gave up 10 to 2,098 whilst those in Shenzhen went 3 lower to 659, in volumes of RMB14.6 billion.
Wharf, #4, took another hammering down 95 cents to $16.65, following the indecisive stance on the privatisation of New Asia, #49, which itself fell 24 cents to $1.79. (End)
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