WEEKAHEAD-HK stocks seen up on 99 growth hopes
By Kathleen Kearney
HONG KONG, March 7 (Reuters) - Hong Kong stocks are likely
to advance next week, buoyed by the positive government
economic projections and budget plans for 1999, but could hit
resistance levels around 11,000, analysts said.
"We are seeing a changing environment, a more positive one
chiefly due to positive budget, especially the Disney and
CyberPort plans," said Y.K. Chan, head of research at New China
Hong Kong.
"We could see the index rising to 11,000 where it is going
to meet with strong resistance," Chan added.
The Hang Seng Index closed up 328.36 points, or 3.31
percent, at 10,241.12 on Friday, just off its day high of
10,253.07. Over the week, the index gained 382.63 points, or
3.9 percent.
The market was buoyed throughout the week by the
government's budget proposals for fiscal 1999/2000 (begins on
April 1).
The government forecast a second consecutive budget
deficit, based on a modest increase in expenditure, steady tax
rates and a return to 0.5 percent positive economic growth in
the current calendar year.
The economy contracted by an estimated 5.1 percent in 1998,
the government said on Wednesday.
The good news was the government was in negotiations with
Walt Disney Co <DIS.N> to build a theme park here and plans for
a multi-billion high-technology Cyberport.
But Hong Kong's ultimate fate lies with the political and
economic outlook in China.
The annual meeting of China's parliament, the National
People's Congress, began on Friday and was to continue
throughout the coming week.
"The market will focus on (Premier) Zhu Rong-ji's Work
Report and I expect this to be generally positive news," Chan
said.
The NPC in this session was to review six constitutional
amendments, including landmark changes to boost the role of
private enterprise and entrench the rule of law.
On Friday, the Dow Industrials gained 268.68 points, or
2.84 percent, to close at 9,736.08 after the government
announced a jobless rate of 4.4 percent for February, up from
January's rate of 4.3 percent.
Not all analysts were bullish on the near-term outlook.
"The (Hong Kong) market looks ready for a bit of profit
taking next week," Archie Hart, head of Hong Kong research at
Deutsche Morgan Grenfell said.
The index was boosted sharply on Friday by interest in HSBC
Holdings <0005.HK> and Hongkong Telecommunications <0008.HK>.
HSBC Holdings, which will go ex-dividend on Monday, was
likely to fall back, dampening the index's upward momentum,
brokers said. Over the week, HSBC Holdings gained HK$10.00, or
4.6, percent to close on Friday at HK$227.00.
Hongkong Telecommunications, which said it would make a
joint announcement with Microsoft <MSFT.O> on Tuesday on future
"strategic cooperation," should continue to rise in advance of
that release, analysts said.
"Many traders were caught short on Hong Kong Telecom on
Friday," said Ricky Tan, senior research manager at Delta Asia
Securities.
The company has been aggressively expanding its
Internet-related holdings, and last week purchased a
Taiwan-based Internet sevice provider.
"A lot of people view the Hongkong Telecom business as a
dead end," Tam said. "Maybe this is will show that is not the
case."
The share closed HK$1.15, or 8.95 percent, higher at
HK$14.50 on Friday, chiefly on the Microsoft news, brokers
said.
Tan said the index could fall to retest 10,150 on Monday,
but it may then regather momentum to reach 10,500 by week's
end.
Market attention will also turn to another round of
corporate results, including Cathay Pacific Airways <0293.HK>,
which will report its 1998 earnings on Wednesday, Hongkong
Electric <0006.HK> on Thursday, and Swire Pacific <0019.HK> on
Friday.
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