WEEKAHEAD-HK stocks seen mixed with HSBC in focus
Sat November 23, 2002 09:24 PM ET
By Bei Bei She
HONG KONG, Nov 24 (Reuters) - Hong Kong stocks could be in for a mixed performance early this week, with tech stocks remaining firm but investors turning cautious on banking giant HSBC Holdings 0005.HK , Hong Kong's biggest stock, after rumours surfaced that its U.S. acquisition plan might be in trouble.
The benchmark Hang Seng Index .HSI gained 2.02 percent last week to 10,065.32, helped by some positive economic news from the United States, Hong Kong's second-biggest export market, but was unable to break far beyond the psychologically important 10,000 barrier.
"This is not a serious rally. I'm sceptical about the index staying where it is," said Renee Hung, assistant fund manager of the Manulife China Value Fund.
The index has lost 11.7 percent so far this year.
Rumours on Friday that HSBC Holdings Plc's planned US$14 billion acquisition of U.S. consumer lender Household International Inc HI.N , which would make the bank a credit-card power house in the United States, might be unravelling is likely to make investors in the stock cautious, even though many analysts believe the rumours to be unfounded.
Household International shares dropped 4.8 percent on Friday on the speculation, although HSBC HSBA.L shares in London dipped just 0.2 percent.
"I do not think this will have any significant impact on HSBC shares, but then I would not be surprised to see a decline for technical reasons," said Ricky Tam, chairman of the Hong Kong Institute of Investors.
HSBC shares have risen on news of the Household deal, announced 10 days ago, and after gaining 0.83 percent on Friday to HK$91 in Hong Kong trade, the shares were technically overbought with a 14-day relative strength reading of 72.47.
Traders said Hong Kong stocks in general will take their cue as usual from U.S. markets but activity there is likely to be sluggish due to a shortened trading week because of the Thanksgiving holiday on Thursday.
Sentiment however has picked up on hopes that U.S. economic recovery is gaining momentum. The U.S. blue-chip Dow Jones industrial average .DJI dipped 40.31 points, or 0.46 percent, on Friday to 8,804.84. Over the whole week, however, it climbed 2.6 percent, its seventh-straight positive week and its longest winning streak in more than four years.
The tech-heavy Nasdaq composite index .IXIC rose 0.08 percent on Friday to 1,468.74, its highest close in more than five months.
Improving sentiment in the U.S. technology sector is likely to keep spilling over to telecommunications and technology stocks in Hong Kong with China Mobile (Hong Kong) Ltd 0941.HK , the world's largest mobile-phone operator, expected to extend gains on the strength of the Nasdaq.
China Mobile rose 0.49 percent to HK$20.70 on Friday, and its price earnings multiple of 13 times is still lower than the Hang Seng average of about 15 times.
Chinese fixed-line phone giant China Telecom Corp Ltd 0728.HK could also benefit if the Nasdaq rally does not break. The stock closed at HK$1.44 on Friday, down 1.37 percent on the day and still below its initial public offering price of HK$1.47 on its listing on November 15.
In addition to watching the health of the U.S. economy, local investors will also be keenly awaiting Hong Kong economic data this week with October export figures due on Tuesday, followed by third-quarter gross domestic product data on Friday.
Resurgent exports are expected to have boosted GDP, which Chief Executive Tung Chee-hwa said last week likely grew by three percent year-on-year in the third quarter. |
