HK's Hang Seng down by midday on China telcos, U.S.
June 18, 2001 1:39am
Source: Reuters
(Updates with quotes, details)
HONG KONG, June 18 (Reuters) - Concern over subscriber growth rates and capacity expansions of China's two biggest telecom operators helped push Hong Kong's blue chip Hang Seng Index (.HSI) below the 13,000 level on Monday morning, a loss of nearly one percent.
Wall Street losses on Friday, and fears of further profit warnings this week, also weighed on the index in early trade but most blue chips were flat by midday.
China-related red chips and H shares lost ground again on fears of further crackdowns by Chinese authorities to stem illegal fund flows from the mainland into Hong Kong stocks.
The Hang Seng Index ended the morning session down 0.94 percent, or 123.14 points, to 12,979.36.
``The market's a bit quiet,'' said Airy Lau, director of sales at SG Securities. ``It's still waiting for further news from China on fund flows to Hong Kong and more direction from the U.S.''
Turnover totalled a low HK$4.6 billion (US$590 million) with losers outpacing gainers by 275 to 141 and 333 issues unchanged.
China Mobile (0941.HK), the mainland's biggest mobile phone operator, fell 3.19 percent to HK$39.50, while its rival China Unicom (0762.HK) dropped 3.09 percent to HK$12.55.
``Short term, people are still sceptical about growth in their subscriber base and capacity expansions,'' said Lawrence Wu, a fund manager at OSK Asia Asset Management.
``But in the long-run they are still big players in China and will benefit from the China growth factor.'' He prefers China Mobile, arguing that as the smaller of the two China Unicom will find it tougher to gain market share.
Growth in the companies' subscriber base appears to be mainly for pre-paid plans which generate lower revenue than contract plans, analysts noted.
The two stocks are also being hurt by weakness in technology stocks globally, exacerbated by an earnings warning on Friday from the world's biggest telecom equipment maker, Nortel Networks Corp (NT.TO) of Canada.
U.S. losses also put pressure on Hong Kong Internet company Pacific Century CyberWorks (0008.HK), sending it tumbling two percent to HK$2.45.
Most blue chips were flat in directionless trade, however, although Cathay Pacific Airways (0293.HK) fell 1.48 percent to HK$10.00 ahead of a meeting on Monday afternoon between the airline's management and pilots' union.
They are hoping to ward off industrial action by resolving a dispute over pilots' pay.
China-related red chips and H shares faced further selling after Chinese regulators last week clamped down on illegal fund flows from the mainland into Hong Kong shares.
The red chip index (.HSCC) fell 1.18 percent to 1,229.05 while the H-share index (.HSCE) dipped 1.76 percent to 514.11.
Stocks gaining ground in morning trade included cable television and broadband Internet company i-Cable Communications Ltd (1097.HK), which jumped 4.35 percent to HK$4.20 after it said it would not proceed with its proposed acquisition of Chinese Internet portal NetEast.com Inc (NTES.O) ``for the time being.''
One analyst said NetEase was not the best choice of partner from i-Cable's point of view.
Hotel operator Shangri-La Asia (0069.HK) was another winner, surging 6.78 percent to HK$6.30 as the company bought back its own shares.
Shangri-La had shed 19 percent in the past month on low occupancy rates in hotels in Southeast Asia, traders said.
(US$-HK$7.8) ^ REUTERS@
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