Hong Kong Stocks: Investors Sell Off Blue Chips On Poor Corporate Earnings
July 26, 2001
Dow Jones Newswires
HONG KONG -- Shares fell 1.4% Thursday, catching up with Tuesday's
decline in the U.S. market, following the closure of the market Wednesday because of a tropical storm.
The blue-chip Hang Seng Index lost 174.28 points, or 1.4%, to 12039.82, after trading the session in a range of 12003.16 and 12229.59. The broader All Ordinaries Index finished down 57.18 points at 5158.22.
Trading volumes were worth 9.00 billion Hong Kong dollars, compared with HK$5.26 billion Tuesday.
Major blue chips were hit the hardest, on worries of poor corporate earnings, said Francis Lun, managing director with Fulbright Securities.
Telecom and port operator Hutchison Whampoa tumbled 3.6% to a 16-month low of HK$72.75. HSBC Securities said in a report Monday that it may make a provision of up to HK$20.7 billion for its stake in U.K. Vodafone. "People are using this as an excuse to sell Hutchison in a day lack of fresh news," said Mr. Lun.
Property company Cheung Kong Holdings, which has a 49.9% stake in Hutchison, shed 3.5% to close at HK$75.75.
HSBC Holdings, which is the parent of the city's two biggest lenders, lost 1.7% to close at HK$86.50. Merrill Lynch expects HSBC and Hang Seng Bank to report earnings declines for the first half. Their earnings are due out early next month. It expects margins for both banks will be under pressure and the continued absence of credit demand will make it difficult for them to increase revenue.
Another brokerage Morgan Stanley Dean Witter said in a report that if Argentina defaults on government bonds, it will do considerable damage to HSBC's profits. It estimates HSBC's exposure in Argentina amounts to more than 1% of total loans and 13% of the bank's equity.
Bank of East Asia, which is due to report first half earnings Tuesday, closed 0.3% lower at HK$18.10.
Among telecom issues, Pacific Century CyberWorks, fell to a new low of HK$1.96 since its merger with Hong Kong Telecom. PCCW shares closed 1% lower at HK$1.98 Thursday, on news its parent Pacific Century Regional Development is deferring for six months, the redemption of 61.58 million preference shares held by Chairman Richard Li because it doesn't have enough earnings.
China Mobile fell 2% to close at HK$34.30. The largest mobile operator on the mainland added 4.2% more subscribers in June for a total of 58.2 million, slightly higher than 4% in May. Nonetheless, the market is worried that rival China Unicom is eating into China Mobile's market share. China Unicom jumped 2% to close at HK$12.85, however.
Property stocks declined, on concerns of excess supply in the market.
The lack of tender submissions in the Choi Hung project indicated that the big players aren't very optimistic about the future, market watchers said.
On the other hand, red chips and H shares bucked the trend. Due to speculative buying, the red chip subindex gained 0.8% while the H-share subindex finished 1.3% higher.
In response to OPEC's decision to cut output quotas by 1 million barrels a day, upstream operators Petrochina and CNOOC added 1.2% and 2.5%, respectively.
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