Wednesday February 10, 12:45 am Eastern Time
HK stocks end morning well down on China, Dow woes
HONG KONG, Feb 10 (Reuters) - Hong Kong stocks slid to a new 1999 low on Wednesday morning to end the session sharply down, depressed by failure of recent fund-raising efforts, the outlook for corporate results and Wall Street weakness, brokers said.
''The Hong Kong market has seen a raft of failures on corporates trying to either issue paper or debt especially if there is a China bias on them,'' Alan Davies, head of regional sales at Paribas Asia Equity said.
The Hang Seng Index finished down 237.73 points or 2.57 percent at 9,006.76, just off a new intra-day low for the year of 9,000.24.
''And I think people are concerned about the implications of the Chinese mainland credit crunch filtering through to Hong Kong,'' Davies said, adding liquidity already had dropped to an average of just over HK$2 billion a day.
But turnover during the morning session was HK$1.77 billion, up from Tuesday morning's HK$1.43 billion and Monday's HK$1.19 billion.
New issues by Chinese enterprises Shandong International Power Development Co Ltd, Heilongjiang Agriculture Co Ltd and Zhujiang Steel Pipe Holdings Ltd in the first five weeks of the year have all been withdrawn.
This was due to a lack of investor interest, the merchant bankers leading the issues have said.
While the debt position of China-related companies remained unclear, investors would shy away from both Hong Kong banks and red chip companies, brokers said.
Wall Street's recent downward trend, due to concerns over the outlook for corporate earnings, added to local concerns, brokers said.
''The other side is that in the U.S. we are seeing pressure on the Nasdaq market,'' Davies said.
Overnight, the technology-laden Nasdaq Composite Index plunged 94.13 points or 3.91 percent to 2,310.79 in its third worst point drop. The Dow Industrials tumbled 158.08 points or 1.70 percent to 9,133.03.
Adding to the local index's downward momentum was a slide in the futures market. The February Hang Seng Index futures contract careered to a low of 8,955 before clawing back a bit to close 350 points lower at 8,970.
But futures brokers said they knew of no reason for the pick-up in negative sentiment late in the morning.
''Open interest and volumes are high. We think that the hedge funds are back and short and waiting for an event to push the index down,'' Kenneth Tang, director at Sassoon Securities said.
The outlook for the market would depend to a great extent on the trend in the U.S. market, analysts said.
''We should hold in the short term at 9,000 if the U.S. doesn't collapse tonight,'' Ted Chen, regional technical analyst at Indosuez W.I. Carr.
But the low turnover is usually not a good sign, he added.
Banking giant HSBC Holdings (quote from Yahoo! UK & Ireland: HSBA.L) shed HK$4.50 or 2.39 percent to HK$184.00 and subsidiary Hang Seng Bank lost HK$1.25 or 2.11 percent to HK$58.00.
The companies will report 1998 earnings on February 22.
Smartone Telecommunications which on Tuesday reported a 4.0 percent decline in earnings tumbled in morning trade.
The share closed HK$1.70 or 8.13 percent lower at HK$19.20.
Analysts' views on the outlook for the company were mixed. But Tai Fook Securities Stanley Tang saw the fall as ''a golden opportunity'' to buy on weakness.
|
