Hong Kong Stocks: Index seen higher on fleeting technical rebound
powerize.com
By BridgeNews Hong Kong--Oct. 20--The Hang Seng Index is expected to rise to
around 14,800 points by the close of Friday's session in a temporary technical
rebound. Telecommunications shares are likely to see further price rises, though
there will be no fundamental buying in the market, only short-covering, analysts
said. The index is expected to encounter fierce resistance at the 15,000-point
barrier.
* * * Further price falls for Pacific Century CyberWorks (PCCW) are likely. One
analyst said that China-related technology stocks might be worth acquiring
during Friday's session, since many of them have been "oversold" recently.
Overnight, the Nasdaq Composite index recorded its third biggest gain ever, in
both point and percentage terms, as investors cheered strong earnings from
Microsoft (MSFT) and other technology bellwethers, such as Finland's mobile
telephony giant Nokia. Analysts said that Hong Kong's market would benefit from
this strong performance overseas. "Japan's market opened 400 points higher. So
we could see something similar. Not fundamental buying though, but short
covering," said Sunny Chan, head of research at KRG Asia Ltd. He predicted the
index would encounter fierce resistance at 15,000 and would close at around
14,800. Chan said that "oversold" counters like China Mobile (Hong Kong) and
other tech stocks would be the big gainers Friday. Ross Cheung, an analyst at
Tanrich Financial Group, agreed that tech counters would be the hot picks for
the last session before the weekend. While several analysts said that PCCW will
likely fall, Cheung said that, despite investors doubts about this counter,
which has fallen for 10 straight days in a row, he expected it to follow the
market upwards and close around H.K. $6.70 (U.S. $0.85) compared with $6.20 at
Thursday's close. At the same time, Cheung recommended ASM Pacific, as a bargain
counter that will likely benefit from the renewal of positive sentiment about
tech-related stocks. "I like China Unicom too. That's another one worth looking
at today," said Cheung, who added that he expects a bright day for the stock
market before the weekend. End Copyright 2000 Bridge Information Systems Inc.
All rights reserved.
---------------THURSDAY'S STOCKS REVIEW FOLLOWS-----------------------------
Hong Kong Stocks Review: Index narrows losses in technical rebound By BridgeNews
Hong Kong--Oct. 19--The Hang Seng Index lost a mere 36 points Thursday, slipping
to 14,422.52, after the Dow closed below the key 10,000 mark and on the back of
poor regional sentiment, analysts said. The market rebounded strongly in the
afternoon, almost completely recovering the morning's loss of more than 200
points. Most telecom stocks benefited from the technical rebound, following what
one analyst called "extreme overselling" during the past few days.
* * * Internet and telecom giant Pacific Century CyberWorks (PCCW) gained
support around H.K $6.00 (U.S $0.77), where it has a good chance of staying, say
analysts. Financials did poorly across the board. The morning session's unease
paralleled other regional markets', but the Hang Seng recovered strongly in the
afternoon and narrowed its losses, just like the Dow did in the United States,
analysts said. "There seems to be a feeling that the market is seriously
oversold," said Sunny Chan, Head of Research at KGI Securities. He added that
this sentiment had aided telecoms stocks in particular. China Mobile (Hong Kong)
Ltd. gained 1.43%, moving up to $49.70. As always, China Unicom Ltd. followed in
China Mobile's footsteps and moved up to $15.55, a gain of 0.65%. The smaller
telecoms provider, Vodatel Network, however, suffered a massive 22.43% collapse
to $0.83 following the failure of its attempt to get a mobile telecoms license
in Macau on Thursday. PCCW lost 1.57%, ending at $6.25, though analysts say
there is a good chance it will not fall much lower. "Between August and December
1999, PCCW was trading at around $6.00. This gives some indication as to what
its support level is," said Chan. He added that fund managers would not be keen
to see it go any lower. Peter Lai, associate director of OCBC securities, was
less optimistic about PCCW. "I think PCCW is still a falling stock. There seems
to still be a considerable amount of short selling pressure." He added that
there were rumors that over-the-counter options had been written with low strike
prices, which added to the selling pressure. As regards the rebound of the other
telecoms stocks, Lai put it down to short covering. "Lots of investors have been
shorting China Mobile, Hutchison and China Unicom, but now the time has come for
them to deliver," he said. He added that investors did not seem to agree with
China Mobile's share price level of $55 for the upcoming share placement but
estimated that counter could move up to around $51-52.
Financials fell across the board the board, with HSBC Holdings down 1.87% to
$105.0. Bank of East Asia fell 1.18% to $16.70 while Hang Seng Bank was 2.56% to
$85.50. Analysts blamed the dumping of bank shares to the disappointing results
announced by Chase Manhattan Bank in the United States. Oil stocks also moved
downward, with the newcomer Sinopec H-shares ending up the day at $1.54, below
its issue price of $1.59. PetroChina also fared badly, crumbling to $1.50, a
loss of 6.25%. However, analysts said that, overall, Thursday seemed to show
that the market would not drop indefinitely. Lai said that Nasdaq futures had
risen 2.6% during the day, and that this boded well for the prospects of the
second board in the United States. "Unless war breaks out, or some terrible
economic news comes out of the United States, we should be able to make it
through Friday's session without going below 14,000 points," he concluded.
FRIDAY'S "HOT" STOCKS According to Alex Wong, head of research at OSK Asia
Brokerage, the stocks to focus on Friday are the small technology companies,
such as ASM Pacific and E-New Media. "These are companies trading below cash
value. There are many good bargains out there, particularly among the small tech
companies," he said. Wong explained that these companies' share prices have
suffered from fallout due to poor profit expectations for similar companies in
the United States. However, he said the comparison was unfair. Regarding ASM
Pacific and E-New Media, he said their "business is quite ok."
More to follow... |
