MARKET TALK-HK: Lower U.S. Rates To Benefit HK Most
Thursday, January 11 3:42 PM SGT
1543 [Dow Jones] Sharp slowdown in U.S. GDP growth in 1Q01 and 2Q01 will weigh on financial markets in Asia ex-Japan but HK will be least affected, says ING Barings Chief Economist Tim Condon. Says HK would be biggest regional winner of lower U.S. interest rate. Explains lower rates and fading deflation will bring real interest rates closer to property yields and help resuscitate HK's mass residential property market, which has been moribund since 1997.(STT)
1536 [Dow Jones] Hapless Pacific Century CyberWorks (0008) down 2.1% at $4.725, it's lowest level since merger with HK Telecom. PCCW recently agreed to tougher terms, both in interest paid and cash flow restrictions, from lenders to its syndicated loan; IP Backbone JV facing stiff competition as Level 3 expects to commence service of its high speed cable outward from HK in 2Q01. Vickers Ballas says PCCW remains exposed to high financial risk, while spin-off plans largely dependent on volatile sentiment on Nasdaq.(IVW)
1531 [Dow Jones] HKMA can't put cap on fees and charges by individual banks as this against its mandate, Chairman Joseph Yam says in briefing to Legco's panel on financial affairs. His comments follow news Standard Chartered Bank will introduce higher charges on small depositors when HK interest rates fully deregulated. Yam adds however code of banking practice currently being reviewed to ensure greater transparency with customers being given 30-days notice of any fee changes.(EAR)
1526 [Dow Jones] Overnight Hibor down late today on HKD selling by major bank, says HK trader. "We don't know who it is yet, but the HKD selling pressure is driving the overnight rate down," he says. Overnight Hibor now 5.0% vs 5.5% late yesterday.(MEW)
1521 [Dow Jones] HSI expected to trade in narrow range with consolidation in bank and property sectors until next rate cut is due, says trader at Chase JF. Notes many funds with high cash level still waiting for opportunity to replenish interest-rate sensitive stocks on hopes of another rate cut at next FOMC meeting, and that should help sustain HSI above 15200 psychological support in short-term. Index now down 1.5% at 15202.(STT)
1516 [Dow Jones] With HK economy recovering and MNCs setting up branches in territory to prepare for China' WTO entry, Core Pacific-Yamaichi expects 20-30% rise in office rentals in 2001; advises investors to collect Swire Pacific (0019) and Wharf (0020) (or its undervalued parent Wheelock (0020)); estimates both companies' NAV to rise by 5.5% for every 50 bp cut in interest rate. Singapore-listed HK Land, one of biggest landlords in prime Central District, shot up recently on talk of re-listing in HK.(IVW)
1509 [Dow Jones] Most HKD forwards up tad in line with narrower gap between Hibor and USD Libor, says HK trader; forwards likely to rise further towards end-January as U.S. interest rates expected to fall faster than local rates, he adds. 1-year now at discount of 140-135 to spot vs 143-138 late yesterday. (MEW)
1457 [Dow Jones] As revenue generated from programing and syndication grows, Salomon Smith Barney expects TVB (0511) to benefit by selling its contents not only to global Chinese audience but also other Asian nations; says TVB may unlock value by leveraging on its "extraordinary content creation machine". Stock up 2% at $41.70.(IVW)
1453 [Dow Jones] Nikkei lowest close since October 1998 sparks knee-jerk selling in HSI; now off 1.1% at 15270 vs midday close at 15358. Selling mainly in banking and financial issues, after strong recent gains on last week's U.S. rate cut. Traders expect initial psychological support for HSI at 15200, adding fall below this level will trigger some stop-loss selling but think chance small.(STT)
1446 [Dow Jones] As expected, Sino Land (0083) didn't exercise 90 million share over-allotment option in its placement Tuesday; shares down 1.2% at $4.125 after plunging 12% yesterday; pre-placement closing $4.75. First Pacific (0142) dives 15.3% to $2.075 after yesterday's 120 million share placement. Sino Land and First Pacific's post placement performance likely to deter cash calls from others. New World Development (0017), Great Eagle (0041), Henderson Land (0012) have been rumored to be possible candidates.(IVW)
1438 [Dow Jones] Nikkei slumps 1.7% to 13201.07, lowest finish since October 1998 and in red for 3rd straight session, on broad-based selling amid concerns over unwinding of crossheld shares; "weak supply-demand fundamentals, unique to Japan, are the biggest factor behind the continuous fall," says Japan brokerage equity manager. Topix sheds 1.9% to 1230.10 close, lowest close since March 1999.(KIX)
1433 [Dow Jones] TVB (0511) will sell up to 400 hours/year of Mandarin language programing to Singapore's Channel U, says SPH MediaWorks which operates channel; Channel U will go on air in May. Immediate share price impact from deal limited as no financial details available. In response to good demand, TVB recently raised charges on its advertising slots. Stock up 2.4% at $41.90.(IVW)
1426 [Dow Jones] KBC Financial Products plans to issue 10-month European call warrant on MTRC (0066). Strike price will be set at 100% of stock's closing price today; warrant (10-for-1) to be priced at 1.7% of closing price. MTRC shares just off record high, with strong interest from investors; also 3 existing MTRC warrants all actively traded; thus demand for new issue likely good.(IVW)
1422 [Dow Jones] Salomon Smith Barney downgrades Singapore-listed Hongkong Land to underperform after stock's 7.9% surge yesterday; says only reason for jump was speculation company could relist in HK, and investors now paying top dollar for the share. Recommends switching to more attractively valued Wharf (0004) or Hysan (0014).(AXT)
1409 [Dow Jones] Short-selling turnover down 21% at $110 million at midday. Largest developer SHK Properties (0016) leads with $27.3 million worth of shares shorted; traders likely betting it may have peaked and should underperform in short-term. Other active counters: big China TMT plays Legend (0992) and China Mobile (0941).(IVW)
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