HK Stocks Close Up, PCCW Steals Limelight
By Susan Fenton
HONG KONG (Reuters) - Internet and telecom play Pacific Century CyberWorks stole the limelight on the Hong Kong stock market on Wednesday, surging nearly eight percent on news of layoffs and hopes for restructuring.
Trade focused on individual stocks as many players were sidelined ahead of a U.S. market holiday on Wednesday for Independence Day.
The Hang Seng Index ended up just 0.17 percent, or 22.78 points, at 13,207.53, after hovering close to that level for most of the day.
Herbert Lau, research director at Celestial Asia Securities, said he believed the index could go higher still.
``There is more positive news coming into the market -- PCCW's restructuring received a very strong response and there is good news on China's entry to WTO,'' he said.
Johnson Electric Holdings, one of the world's biggest micro motor manufacturers, was another outperformer, leaping 9.3 percent to HK$11.75, its highest level in a week, on better than expected U.S. manufacturing orders and its acquisition of a U.S.-based motor component business from Textron Inc
Prior to the start of Wednesday trade, the stock had tumbled 18 percent over the past month on concern about the U.S. economy, one of Johnson's biggest sales markets.
PCCW was more active, however, drawing volume worth HK$383 million (US$49 million), making it the second most heavily traded stock after Hang Seng Index heavyweight China Mobile
Total market volume was a light HK$6.48 billion, down from HK$7.63 billion on Tuesday. Winners outpaced losers by 257 to 202 with 289 stocks unchanged.
PCCW said early on Wednesday that it would fire 340 employees as part of a reorganization of its Internet operations, sending its much battered shares soaring by as much as 8.9 percent to HK$2.45, its highest level in about two weeks. The counter ended the day up 7.78 percent at HK$2.425.
PCCW was scheduled to unveil a revamp of its consumer Internet strategy at 0900 GMT on Wednesday.
Traders said ample short covering helped fuel the gains.
As of the close of trade on Tuesday, the stock had shed 85 percent in the past year and 13 percent in the past month on uncertainty about the company's business strategy.
Dragging on the market was China Mobile, which drew profit-taking after gaining 12 percent in the past month. It fell 1.18 percent to HK$41.80.
Some players were reported to be switching out of China Mobile to rival mobile phone operator China Unicom, preferring the latter's subscriber growth potential.
China Unicom rose 1.82 percent on Wednesday to HK$14, its highest close since November 24.
Paul Pong, a fund manager at Pegasus Fund Managers, however, likes both stocks.
``If China joins the World Trade Organization (news - web sites) it will open up two key sectors -- finance and telecoms,'' Pong said. ``These are the only two big telecom operators so many foreign companies will want to cooperate with them.''
Beijing said on Tuesday that all major issues between China, the United States and the European Union (news - web sites) on Beijing's planned entry to WTO had been resolved.
That had little immediate impact on China-related shares, however.
The H-share index of Hong Kong-listed mainland companies dipped 0.15 percent to 531.13.
The red chip index of Hong Kong-incorporated China companies rose just 0.66 percent to 1,203.88.
``WTO is really just a matter of time now since the negotiators have painted a very promising picture and the major hurdles have been cleared,'' said Ben Kwong, associate director at KGI Asia Ltd. ``There may be a bit of consolidation on the H-shares and red chips for another one to two weeks before they take off.''
On the broader market, Hang Seng Bank jumped 3.37 percent to HK$84.25, a three-week high, on rumors it may offer a special dividend when it releases financial results next month.
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