Daily Quommentary: Nasdaq Fall Overwhelms Local Positive News
Feb 19, 2001 - 10:04:21 HKT
QuamResearch
quamnet.com
A 5% decline in the Nasdaq last Friday should overwhelm the positive impact of government's relaxation of anti-speculation measures on the property market when the market opens this morning. As shown in the low trading volume, the selling pressure should not be big enough to trigger a major correction in the overall market.
The TMT-rich Nasdaq Composite last Friday lost 128 points or 5% to close at 2,425 after reaching an intra-day low of 2,397. The selling pressure was mainly from the IT sector as the old-economy-dominated DJIA was down just 0.84% to 10,800. Following a 126-point decline in the HSI, the Hang Seng London reference index dropped another 113 points to end the week at 15,517. Major decliners were Hutchison (13), down another 62.5 cents from HK closing price of $95.125, Henderson Land (12), down another 47.5 cents to $43.125, and HSBC (5), down $1 to $119.
The American Depository Receipts (ADRs) of telecom giants China Mobile (941), Unicom (762) and PCCW (8) respectively lost 1.7%, 2.9% and 4.3% from their HK closes to US$29.30 (equivalent to $45.70), US$15.14 ($11.80) and US$5.68 ($4.43). These shares might put some pressure on the market.
Last Friday the HSI closed at 15,630, down 126 points on turnover of $7.09 billion. Major losers in the Index were properties and telecos. SHKP (16), Henderson Land, and Sino Land (83) were respectively down $1.50, 60 cents and 12.5 cents at $81, $43.60 and $4.225. Landlord Hysan (14) and landlord-turned-developer Amoy (101) also lost 60 cents and 15 cents to $13.40 and $8.70 respectively. China Mobile (941) lost 90 cents at $46.50 and SmarTone (315) shed 60 cents at $12.30. Hutchison, however, managed to buck the trend with a 25-cent gain to $95.75.
The Hong Kong government's announcement on the relaxation of anti-speculation measures on the property market had some instant impact on the property sector. Hing Kong (535), a smallish developer, had decided to delay the selling of its Yuen Long residential development in the hope of selling at better prices later. With improved market sentiment, it is also reported that there had been over 280 new flats sold over the weekend. The second hand market, however, is still fairly quiet although property agents claimed that some of their clients had raised their asking price by 3% to 5%. As there are still at least 30,000 unsold new flats for sale, we suspect that any demand to increase selling prices will be cold-shouldered.
We have seen a strong rebound in the property counters since the beginning of last December when Alan Greenspan first hinted at a U-turn in monetary policy. The upside potential will not be big enough to merit "buy" recommendations on these major developers. Bottom-fishers should find better values in some selected China enterprises. Their strength was revealed in the Hang Seng H shares index, which last Friday managed to rise 2.31 points to 391.52 despite a 126-point drop in the HSI. Our favourites remain the energy plays PetroChina (857), Sinopec (386), Shandong Power (1071), Shanghai Petrochemical (338) and BJ Yanhua (325). (end)
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