Hong Kong Stocks Mixed; China Shares Rise as CyberWorks Falls
By Yeong Choy Leng
Hong Kong, Feb. 20 (Bloomberg) -- China stocks trading in Hong Kong gained for a second day on expectations new rules on stock ownership in the mainland will boost their share price. Yizheng Chemical Fiber Co. led gains.
China is allowing local investors to buy foreign currency denominated B shares without restrictions, making China stocks in Hong Kong and overseas more attractive. Chinese state-controlled, Hong Kong-listed companies, or H-shares, trade at an average of 11 times earnings, compared with 20 times for B shares and 63 times for local currency A shares.
``People are just trying to get into any stock which offers a discount to their A share counterparts,'' said Stella Lau, managing director of East Asia Asset Management, which manages $500 million. ``Some of gains are just too speculative and irrational'' in terms of earnings outlook. Still, Lau increased her China exposure to ``neutral'' from ``underweight.''
Leaving the market mixed, Pacific Century CyberWorks Ltd. fell after shareholder Cable & Wireless Plc said it hasn't found a buyer for its 14.9 percent CyberWorks stake yet, fuelling concern it will be forced to sell its stake in the open market.
The Hang Seng Index rose 23.29, or 0.2 percent, to 15,514.25, after falling 2.3 percent in the past three days. In the broader market, 233 stocks rose, 164 fell and 325 were unchanged. The Hang Seng China Enterprises Index, which tracks H-shares, gained 3.5 percent while China-backed investment companies, or `red chips,' rose 1.2 percent as a group.
Trade at HK$5.7 billion ($735 million) was two-thirds the full-day average for the past three months.
China's stock exchanges in Shanghai and Shenzhen said trading in B shares will remain suspended through Friday to allow for an orderly transition to new rules on stock ownership.
The following is a list of companies whose shares are active.
Hong Kong stocks:
Pacific Century CyberWorks Ltd. (8 HK ), Hong Kong's largest telecommunications company, fell 15 cents, or 3.2 percent, to HK$4.50. Starting Feb. 17, Cable & Wireless was allowed to sell its CyberWorks stake as part of its agreement when it sold Cable & Wireless HKT Ltd. to CyberWorks. Investors are worried if C&W sells its stake in the open market, the move may increase the supply of CyberWorks shares and depress the stock price.
China stocks traded in Hong Kong and the mainland extended yesterday's gains. China Petroleum & Chemical Corp., (386 HK ), or Sinopec, rose 3 cents, or 2.3 percent, to HK$1.31. Jilin Chemical Industrial Co. (368 HK ), a unit of PetroChina Co., extended its 21 percent gain in the past three days, rising 9 cents, or 18 percent, to 60 HK cents. Yizheng Chemical Fiber Co. (1033 HK ), the world's fourth-largest polyester maker, extended yesterday's 10 percent gain, rising 18 cents, or 11 percent, to HK$1.79. Guangdong Kelon Electrical Holdings Co. (921 HK ), China's largest refrigerator maker, soared 52 cents, or 39 percent, to HK$1.84.
Chinese brokerages gained on expectations trading volume in Shanghai and Shenzhen will increase, boosting their earnings after the government allows local investors to buy hard currency shares. China Everbright Ltd. (165 HK ), which owns banking and brokerage businesses in the mainland, extended yesterday's 6.1 percent gain, rising 15 cents, or 1.7 percent, to HK$8.80. Shenyin Wanguo (H.K.) Ltd. (218 HK ), a subsidiary of China's third-largest brokerage, extended its 19 percent gain in the past two days, surging 14.5 cents, or 33 percent, to 58 HK cents, its biggest one-day gain since August 1993.
Beijing Datang Power Generation Co. (991 HK ), one of China's biggest electricity generators, rose 27.5 cents, or 11 percent, to HK$2.825, its highest since May 22, 1998. The company is teaming up with four others to invest 2.69 billion yuan ($325 million) in a venture to build a coal-fired power plant in Yunnan province.
Ehealthcareasia Ltd. (835 HK ), a Hong Kong company that provides medical information online, was unchanged at 31 HK cents after earlier rising as much as 3.2 percent. The company said it's in initial discussions to make an acquisition that may involve selling new shares. The company's statement came after the stock surged 41 percent in the past five days.
Kowloon Motor Bus Holdings Ltd. (62 HK ), the world's largest non-government city bus operator, rose 5 cents, or 0.2 percent, to HK$20.60. Its advertising unit plans to raise as much as HK$500 million ($64 million) in its first public share sale, the Hong Kong Economic Times reported, citing unidentified people.
Telecom Plus Holdings Ltd. (1013 HK ), which makes audio and toy products, jumped 3.5 cents, or 13 percent, to 29.5 HK cents after being suspended since Feb. 13. This is its biggest one-day gain since July 14. The company said in a statement it will pay HK$16 million ($2.05 million) for a 51 percent stake in Beijing Hollybridge System Integration Co., an information technology and system integration service provider. The company said profitability will be increased after the acquisition.
TravelSky Technology Ltd. (696 HK ), China's state- owned air travel reservations system, rose 5 cents, or 0.9 percent, to HK$5.45. The company raised an extra HK$166.2 ($21.3 million) due to strong demand, bringing its first-time share sale to HK$1.27 billion, said Goldman Sachs Group Inc.
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