Friday, January 19 1:00 PM SGT MARKET TALK-HK: Legend Is Goldman's Top Stock Pick
1300 [Dow Jones] STOCK CALL: Goldman Sachs names Legend (0992) its No. 1 stock pick for Asian-Pacific region ex-Japan, on its exposure to China and tech sector. Goldman research analyst Tim Ariowitsch calls Legend "the one global bright spot" in worldwide tech sector; while global PC demand falling rapidly, China market expected to grow 25% annually over next three years. Legend leader in mainland's PC market, with 26.3% share; key reason: Legend's expertise in sales and branding; one recent survey says Legend is China's favorite brand. Predicts stock will climb to $7-$7.50 in medium term, with P/E ratio of 40X for FY02. ING Barings also optimistic; has target price of $8.90.(SMG)
1245 [Dow Jones] HSI retreats slightly after hitting day high of 15950.78 on back of Wall Street's gains overnight; HSI up 2.4% at 15900 midday. Volume swells to $8.19 billion, slightly higher than yesterday's $6 billion; but with Chinese New Year holiday next week, traders expect HSI upside capped below 16000 psychological resistance as trading winds down. HSI's front-runner is Pacific Century CyberWorks (0008), up 7.1% at $4.55 as investors bet Cable & Wireless PLC's pending share placement may be sold to strategic investor instead of placed to public.(STT)
1231 [Dow Jones] Following Swire Pacific's (0019) rebound, up 6.2% at $55.50, some analysts reiterating conglomerate's valuation somewhat high again after losing 11% over past week on news of its land premium payment for property developments in City Plaza. With slowing passenger traffic growth hurting unit Cathay Pacific (0293) and outcome of land premium arbitration case yet to be finalized, analysts say significant outperformance unlikely in near-term.(STT)
1221 [Dow Jones] STOCK CALL: UBS Warburg upgrades Beijing Datang Power (0991) target price to $2.60, from $2.40, or about 9.5X FY01 estimated earnings. Expects repeal of State Council's Article 69 will bring M&A back into focus, helping Beijing Datang, which is one of biggest beneficiaries of relaxed policy on asset acquisition. Says company limited from grid expansion and must look outside for growth; add it has enough financial resources for purchases as net debt-to-equity ratio estimated at 31% for FY01. Shares flat at $2.05.(STT)
1204 [Dow Jones] Utility subindex down 0.4% at 20,357.57 as investors moving away from defensive sector, where they've been hiding, and back into telecom sector, mostly. Sector mainly down on 1.8% fall in HK Electric (0006); stock now standing at $27.10 on thin turnover worth $54 million; CLP (0002) flat at $36 on $84.6 million turnover; HK & China Gas (0003) bucks trend, up 0.5% at $10.90 but turnover also low at $41.8 million.(STT)
1159 [Dow Jones] Don't get too excited about outlook for Asia chip giants just yet: DRAM prices may dip again next month and test new lows, says Salomon Smith Barney; while some Korea DRAM makers reporting low inventory levels of 2-4 weeks due to production switch, inventories at other makers building. Notes some industry leaders keeping inventory warehoused rather than sell below cost, which means now sitting on huge inventories; "this is alarming because inventories are expected to continue to build in coming weeks due to lack of demand."(RXM)
1148 [Dow Jones] Economists seem confident California power crisis won't drag broader U.S. economy down with it; crisis has raised talk Fed may cut rates by as much as 50 bps this month. But economists note problem so far contained to state's power industry and most crucial industries have made contingency plans; some analysts say spiraling energy costs could pose some inflationary problems for state, although it's hard to say by what degree.(RXM)
1143 [Dow Jones] Light trading in spot market expected to keep Hang Seng January futures in tight range below 16000 psychological resistance today, says futures trader at European bank. January futures now up 2.5% at 15920 on volume of 10,702 contracts. Says number of buying and selling orders about the same so far, and futures trading at premium of only 20 points to spot.(STT)
1132 [Dow Jones] Analysts say still premature to buy Pacific Century CyberWorks (00008) shares on hopes C&W PLC's pending share placement of half its stake in PCCW may be sold to a strategic investor. Note another rumor, which suggests PCCW in talks with large funds to buy C&W's share placement to stall shares flowing into public hands which may make weak stock more vulnerable, also sketchy; add many funds reluctant to take up PCCW placement after suffering hefty losses from subscribing to PCCW share placement last September. Stock up 6.5% at $4.525, off earlier high at $4.675.(STT)
1118 [Dow Jones] Pacific Century CyberWorks (0008) bouncing back; up 7.7% at $4.575, keeping up with broad market's gains as well as market speculation C&W PLC's pending block sale may be to a strategic investor who will swap half of C&W's 15.3% stake in PCCW with its assets. Separately remarks by chairman Richard Li expressing confidence fund managers will make positive response to PCCW shares to be placed by C&W also helping rebound.(STT)
1114 [Dow Jones] Standard Chartered Bank says risks skewed in favor of more aggressive Fed easing after exceptionally weak Philadelphia Fed survey; "our initial expectations for a 25bp cut at the Jan 31 FOMC meeting may need to be revised higher if upcoming data adds to evidence that the U.S. economy is sliding into recession."(NET)
1106 [Dow Jones] Despite active short-covering, few fresh positions opened so far, says futures trader at W.I. Carr Indosuez; says with Chinese New Year holidays approaching, most traders focussing on rolling over or squaring their positions instead of building new positions. January futures up 2.7% at 15945 with 8,819 contracts having changed hands so far.(STT)
1057 [Dow Jones] Nikkei ends morning near intraday high, up futures-driven 1.3% at 14053. Sentiment buoyed by week's talk of stock support steps, and any bad economic news increases perceptions some proposals may be realized, say players say; but supply conditions still favor downside, and lots of selling into rallies noted. Broader Topix lagging Nikkei gains, up just 0.5% at 1317.(LCT)
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