HSI Down Midday as Investors Await News on PCCW (Update1)
Apr 02, 2001 - 13:40:58 HKT
Quamnet News Service
Hong Kong stocks were lower at midday Monday despite gains on the Wall Street last Friday. Buying interest was weak, as the market awaits news from U.K.'s Cable & Wireless Plc about a sale of its entire 14.9 percent stake in Hong Kong's Pacific Century CyberWorks (0008), which is expected to be made after 2 p.m. local time today. PCCW shares were suspended today.
Properties fell 1.65 percent as a group, making them the biggest percentage losers. Telecoms mostly fell. Cushioning the market from falling sharply was HSBC Holdings (0005), which rose ahead of its announcement of a new plan on fees and charges tomorrow. H shares staged a fourth day of gains.
At midday, the benchmark Hang Seng Index was down 33.88 points, or 0.27 percent, to 12,726.76, having moved between 12,634.28 and 12,843.9. Turnover was HK$3.79 billion.
The Growth Enterprise Market index, which tracks the mostly high-tech startups on the exchange's second board, was at 259.46, up 2.57 points or 1 percent. Turnover was HK$58.12 million.
"As the global economy is weak, blue chips with international operations will be affected first," said Kappa Tse, research analyst at APC Securities Ltd. "Red chips and H shares were chased after as they look relatively cheap following the recent rallies in mainland-traded A shares and B shares."
The blue-chip index may go back to the 13,000 level this week, Tse predicted. "But don't expect turnover to be huge this month because we are going to have four trading days closed for holidays," he added.
Properties fell 1.65 percent as a group. Of the city's two largest property developers, Cheung Kong Holdings Ltd. (0001) fell 0.3 percent to HK$81.50, while Sun Hung Kai Properties Ltd. (0016) was down 1.6 percent at HK$72.75.
New World Development (0017), a property developer which also invests in telecoms, fell 0.5 percent to HK$9.95. Swire Pacific Ltd. (0019) lost 1.2 percent to HK$47.70.
Meanwhile, Morgan Stanley Dean Witter said in a note to clients today that it expects properties to outperform the market in the next nine months, and that property prices should rise by 9 to 14 percent in the coming year.
Telecoms were soft even though the technology-laden Nasdaq market ended up 1 percent last Friday.
China Mobile, the mainland's largest mobile phone company, dropped 0.3 percent to HK$34.20. The stock had lost 19.7 percent last month.
Still, rival China Unicom Ltd. (0762), which holds the core operations of China's No. 2 phone company, gained 4.2 percent to HK$8.75 ahead of its full-year earnings tomorrow. Turnover was HK$68.3 million, a fifth more than its full-day yesterday. Morgan Stanley Dean Witter said in a note to clients last week that it expects Unicom to report a 125-percent jump in 2000 net profit to 1.9 billion yuan.
Hutchison Whampoa Ltd. (0013), the biggest Asian investor in the European telecoms industry, was flat at HK$81.50. MSDW said in its note to clients today that it expects Hutchison to outperform the market.
Richard Li's PCCW was suspended after ending down 5.4 percent at HK$3.075 last Friday, or down 30.9 percent for last month. The U.K.-based C&W has been seeking to sell a 7.5 percent stake in the company, the lock-up period for which expired on Feb. 17. A source familiar with the situation told Quamnet News that C&W will sell a bond convertible into its entire 14.9 percent stake in PCCW. Trading in PCCW shares and twenty derivative warrants of the company are expected to resume tomorrow.
"PCCW is likely to drop sharply tomorrow," said Tse. "But that could help the stock to bottom out and enable it to gain momentum after the consolidation."
Heading up was HSBC, Europe's largest bank, which rose 0.8 percent to HK$92.75. HSBC will announce a new plan on fees and charges tomorrow. Meantime, HSBC Securities said last Friday that it maintained its "hold" recommendation on the stock and said its HK$102 target price fully reflects the long-term sustainable return on equity that it believes HSBC carries.
Hang Seng Bank (0011), a unit of HSBC, fell 0.3 percent to HK$90.25. Bank of East Asia Ltd. (0023) was unchanged at HK$17.55.
Among the few market gainers was Johnson Electric Holdings (0179), which rose 0.8 percent to HK$12.50. Morgan Stanley Dean Witter said last week that it set a 12-month target price on the stock at HK$16, representing a 28 percent upside from its current stock price.
Oil issues were mostly up. China's No. 1 oil producer PetroChina Co. (0857) was up 0.7 percent at HK$1.41. Refining giant China Petroleum & Chemical Corp. (0386) rose 3.7 percent to HK$1.27. CNOOC Ltd. (0883), the nation's largest offshore oil producer, was flat at HK$6.90.
Red chips and H shares outperformed the broader market by rising 1.63 percent and 2.82 percent as a group respectively.
China Everbright Ltd. (0165), the Hong Kong-listed flagship of China Everbright Group, added 2.9 percent to HK$6.95 after saying last Friday that its net profit rose 2.9 times to HK$1.29 billion in the year ended December, from a year earlier.
Beiren Printing Machinery Holdings Ltd. (0187), a Chinese state-controlled maker of sheet-fed offset presses, soared 10.1 percent to HK$1.64 after saying that it seeks to raise net proceeds of 495 million yuan by issuing up to 50 million A shares for listing on the Shanghai Stock Exchange to fund business development.
Power-related issues attracted buyers as their prices are relatively stable and there is substantial upside, said Patrick Yiu, associate director of Kingsway SW Securities Ltd. Huaneng Power International Inc. (0902), one of China's largest independent power suppliers, rose 5.4 percent to HK$4.425. Beijing Datang Power Generation Co (0991) was up 5 percent at HK$2.625. Shangdong International Power Development (1071) was at HK$1.61, up 3.2 percent.
Hong Kong utilities edged up after an initial dip. CLP Holdings Ltd. (0002), Hong Kong's largest power supplier, rose 0.5 percent to HK$10.65. Hongkong Electric Holdings Ltd. (0006), which supplies electricity to Hong Kong island, was flat at HK$28.
Hong Kong Exchanges and Clearing Ltd. (0388), the city's marketplace for stocks and futures, was 0.4 percent down at HK$12.50.
The Mass Transit Railway Corp. (0066), the local subway operator, was up 0.4 percent at HK$12.70. The government had started preparation work a week ago for MTRC to raise HK$15 billion later this year, according to the Hong Kong Economic Times, which didn't name its sources.
On the GEM, Tom.com Ltd. (8001), a China portal controlled by Li Ka-shing, fell 0.5 percent to HK$1.98. SUNeVision Holdings Ltd. (8008), the Internet arm of SHKP, was quoted at HK$2.075, down 1.2 percent.
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