Hong Kong Stocks: Gains by HSBC Lead Broader Market Higher
September 26, 2001
Dow Jones Newswires
HONG KONG -- Gains by market heavyweight HSBC Holdings helped Hong Kong shares edge up 1.8% Wednesday, but analysts said the market is still gripped by uncertainty about a possible U.S. military response to the terrorist attacks two weeks ago.
The blue-chip Hang Seng Index closed up 161.69 points at 9371.75. Volume was thin at 5.98 billion Hong Kong dollars, compared with HK$8.09 billion in the previous session.
The broader All Ordinaries Index finished 53.26 points higher at 4038.48.
"There's no consensus in the market," said S. W. Chu, head of research with G.K. Goh. "There are still a lot of uncertainties...when the U.S. will take action, how long it's going to last, and what kind of [military] strategy. I don't recommend investors do any bottom-fishing," he said.
Still, traders said short-covering and window-dressing by fund managers before the end of the third quarter helped to keep the HSI buoyant Wednesday.
HSBC led the way up after losses in the past sessions. It was the most actively traded stock with HK$1.19 billion worth of shares changing hands. HSBC's shares rose 5.2% to HK$75.50, while its Hang Seng Bank unit ended flat at HK$75.75.
But Andrew To, dealing director, Tai Fook Securities, warned that prospects in the banking sector remain under pressure as dark clouds hang over the global economy. In addition, Merrill Lynch has also said it is concerned weak loan growth and rising nonperforming loans could affect banks' earnings.
Also helping the HSI to inch higher Wednesday are telecommunications stocks. China Mobile Ltd. gained 1.1% to HK$23.40 and its rival China Unicom rose 0.6% to finish at HK$8. Traders said these companies, which have no business operations in U.S., provide a safe haven for investors as uncertainty reigns in the market.
Pacific Century CyberWorks also put in a strong performance, rising 3.8% to HK$1.93, with HK$425 million worth of shares changing hands. Deutsche Bank said PCCW's debt level is overemphasized in the market. If effective cost controls continue, PCCW's earnings per share could be boosted by 40% a year over the next three years, Deutsche Bank said. That would make PCCW the "fastest growing incumbent" telecom company in Asia.
In the property sector Cheung Kong Holdings' gains helped to pull up the HSI. Cheung Kong rose 2.29% to HK$55.75. Amoy Properties Ltd. also gained 3.5% to close at HK$7.40, while Sino Land was up 2.47% despite posting disappointing results for the fiscal year 2001.
However, overall it was a mixed picture in the sector. Sun Hung Kai Properties Ltd. fell 1.33% to HK$44.60 and New World Development dropped 2.09% to HK$4.675 as analysts remain concerned about upcoming earnings.
Meanwhile, aviation stocks continue to reel from the aftermath of the terrorist attacks in the U.S. Cathay Pacific was down 0.75% at HK$6.65, as airlines world-wide worry about the considerable damage to their bottom lines. Ratings agency Standard & Poor's Corp. has placed Cathay's major shareholder Swire Pacific on CreditWatch negative, causing its shares to fall 2.36% to HK$29.
Mainland's China Eastern Airlines lost 7.41% at 75 HK cents and China Southern Airlines fell 4.82% to HK$1.58.
U.S.-linked stocks also suffered further losses Wednesday, with Li and Fung Ltd. falling 2.05% to HK$7.50 and Johnson Electric Holdings Ltd. down 6.9% to HK$6.75.
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