Hong Kong Stocks: PCCW weakness seen dragging index to 17,000 Click here for Related Links
Hong Kong Stocks: PCCW weakness seen dragging index to 17,000
By Rekha Sujanani, BridgeNews Hong Kong--Sept. 11--Hong Kong shares are seen
heading lower Monday led by a continued weakness in major telecom counters, said
brokers. The slide in the tech-heavy Nasdaq Friday and the continued pressure on
heavyweight Pacific Century CyberWorks is seen dragging telecom-related counters
lower and the benchmark Hang Seng Index to around 17,000, they said.
* * * The Dow dropped 0.35% and the Nasdaq skidded 2.93% Friday. "The market is
likely to test 17,000 because telecom counters are still weak," said OSK Asia
Brokerage research manager Alex Wong. Firm support stands at 16,800-16,900, he
said. He expects the banking and property sectors to hold firm but the pressure
on telecoms to pull the index lower. "PCCW will be the one leading the losses
today," he said. Despite the counter's sharp slide late last week, he believes
the stock still has more room to head south. "It will probably go down even more
and break below $13.00. After falling below that, another bout of panic-selling
is likely to drag the stock to around $12.50-$12.60," he said. PCCW closed
Friday at H.K. $13.20 (U.S. $1.69). End Copyright 2000 Bridge Information
Systems Inc. All rights reserved.
------------------------FRIDAY'S STOCKS REVIEW FOLLOWS-------------------------
Hong Kong Stocks Review: Pacific Century drags HSI 0.9% lower By BridgeNews Hong
Kong--Sept. 8--Fears of massive institutional selling of Internet giant Pacific
Century CyberWorks (PCCW) by key shareholders prompted a huge sell-off in the
technology counter Friday, dragging the Hang Seng Index (HSI) 0.9% lower in what
was otherwise a thinly-traded and lackluster session. The Hang Seng Index fell
156.50 points to 17,275.45 on turnover of H.K. $7.88 billion (U.S. $1 billion),
slumping from Thursday's $11.46 billion.
* * * PCCW, owned by Internet tycoon Richard Li, dominated Friday's turnover,
with $1.1 billion worth of shares changing hands, equivalent to 14% of the day's
entire trading volume. Most counters lost ground Friday, with a handful of
banking counters rising against the market tide. Hang Seng Bank was among the
gainers, rising $0.25 to $87.75. PCCW was investors' main focus of attention
though, with institutional sales expected anytime soon, made worse by a planned
venture capital fund in which PCCW had played a part having collapsed overnight,
brokers said. PCCW and two U.S.-based partners decided to drop plans to form a
fund designed to invest in emerging Internet businesses, PCCW said Friday. PCCW,
technology company CMGI and venture fund Hicks, Muse, Tate & Furst (HMTF) will
instead pursue a "more flexible approach for co-investment", according to the
companies. (Story .10914) Brokers said the collapse had prompted concerns over
PCCW's overall strategy. PCCW claimed Friday that the decision a mutual one
between all the three parties. PCCW shares fell $0.65 or 4.7% to $13.20. Brokers
added that overriding concerns of upcoming placements, including those related
to PCCW, further pressured the benchmark index downward. Tanrich Securities
equities analyst Ross Cheung said that U.K.-based telecoms company Cable &
Wireless PLC was expected to dispose of some 1 billion PCCW shares, gained when
the telecom company sold its Hong Kong subsidiary Cable & Wireless HKT to PCCW
earlier this year. Cheung estimated this was equivalent to 4.9% of the enlarged
share capital of PCCW. "PCCW is having quite a negative influence on the market.
PCCW dropped below the key $14.00 level today, and we're all looking at it
falling to $12.00 now. We're advising our clients to stay put and buy it when it
gets lower," Cheung said. Brokers added that CMGI, PCCW's venture capital
partner, was expected to place 241 million PCCW shares into the market "anytime
soon", in a bid to attract investor interest before all heads turn toward the
major initial public offerings (IPO) hitting the market next month. Three IPOs
worth around $47 billion in total are expected in October. The companies are
government-owned subway operator Mass Transit Railway Corp., China oil group
Sinopec, and Chinese telecoms provider Jitong Communications. "PCCW is
experiencing strong selling pressure. C&W is trying to sell it, and CMGI, so
everyone's locking in profits now," said Louis Tse, executive director at
Standard Capital Brokerage. Some brokers speculated that C&W might have already
placed shares with major investment banks, and that selling on behalf of C&W had
begun already. C&W has up to November 15 to dispose of the block of shares,
according to Tanrich's Cheung. Property stocks fell 1.14% according to the Hang
Seng properties index, while the utilities index nudged 0.1% higher. CLP
Holdings and Hongkong Electric, the territory's two power providers, both rose
as investors sought defensive positions in stocks with steady revenue streams.
CLP rose $0.40 to $36.30 while Hongkong Electric rose $0.05 to $24.95. Hong Kong
& China Gas fell $0.15 to $9.75 after it announced an interim net profit of
$1.595 billion, up 8.1% on year. The earnings were virtually identical with
analysts' consensus forecast of $1.596 billion. Dresdner Kleinwort Benson had
forecast $1.624 billion. |
