HONG KONG (XFN-ASIA) - Share prices closed weaker in rangebound trade, with
the market seen entering a consolidation phase after gaining nearly 15 pct over
the last five weeks.
Select blue chips and China banks succumbed to profit-taking, with exporter
Li & Fung losing over 6.7 pct after rising more than 7 pct in the past two
trading sessions.
The market got off to a positive start following better-than-expected US
jobs and factory orders data but lost steam by midmorning as volumes were light.
E-commerce firm Alibaba.com slumped nearly 6 pct on worries that its
first-quarter results, due tomorrow, may have been affected by a global economic
slowdown.
News that Microsoft abandoned its bid for Yahoo also had some psychological
impact.
Angang Steel was up nearly 4 pct after a report that European steel giant
ArcelorMittal is looking to acquire a stake in the Chinese firm.
Maoye International Holdings, a mainland-based department store operator,
closed below its initial public offering price on its trading debut.
The Hang Seng index closed down 57.07 points or 0.22 pct at 26,183.95, off a
low of 26,118.61 and high of 26,387.37.
Turnover was 74.04 bln hkd.
"The market saw some profit-taking after gaining more than 3,000 points
since the beginning of the second quarter," said Peter Lai, sales director at
DBS Vickers..
He noted that volumes were light as investors are looking for fresh trading
leads.
The market outlook remains positive, although it may consolidate for a
while, Lai said, adding that US data will continue to be crucial.
"The (index) should see very strong resistance at the 26,800-27,000 range in
the near term," he said.
Matthew Kwok, research head at Tanrich Securities, said the local bourse is
taking a "healthy" pause after recent sharp gains.
"Some shares are facing strong resistance at current levels," he said. "The
local benchmark index will likely consolidate around the 26,000 level."
"However, I don't expect a sharp fall in the near term," he said, adding
that worries over a global credit crunch have eased while first-quarter results
of most China firms have also been positive.
Dealers said the market was helped in early trade by US economic data.
Data released Friday showed US employers cut 20,000 jobs in April, fewer
than the 75,000 that economists had expected, while factory orders in March rose
1.4 pct after declines in the previous two months.
Among large-caps, HSBC finished flat at 136.3 hkd, while Hong Kong Exchange
& Clearing was down 0.10 hkd or 0.06 pct at 166.40, China Life was up 0.2 hkd or
0.57 pct at 35.35 and Hutchison Whampoa added 0.15 hkd or 0.20 pct at 76.85.
Li & Fung lost 2.25 hkd or 6.75 pct at 31.1 on profit-taking, while another
exporter and retailer Esprit was down 2.35 hkd or 2.49 pct at 91.95.
China telecom stocks were mixed after early gains following a report that
telecom industry restructuring on the mainland may start as early as the 17th of
this month.
China Unicom Ltd chairman Chang Xiaobing may be appointed as China Mobile's
next chief executive as part of the restructuring, the South China Morning Post
said.
China Unicom was up 0.14 hkd or 0.82 pct at 17.12, China Telecom was flat at
5.39 hkd and China Netcom was down 0.25 hkd or 1.01 pct at 24.5.
China Mobile was down 1.70 hkd or 1.25 pct at 134.4 on worries that it could
face more competition from stronger rivals that are expected to emerge from
industry restructuring.
Citigroup, however, said in a note that China Mobile should be the long-term
winner of the industry restructuring because of the company's cost advantages
and branding power.
It reiterated a "buy" call on China's top wireless services company, while
also maintaining a similar call on China Unicom, whose share price is expected
to rise ahead of the restructuring.
China banks were mostly weaker, with ICBC losing 0.12 hkd or 1.91 pct at
6.17, China Construction Bank down 0.05 hkd or 0.70 pct at 7.14, Bank of China
flat 4.06 hkd and Bank of Communications up 0.04 hkd or 0.35 pct at 11.5 hkd.
Properties were mostly higher despite local banks' decision not to follow
cuts by the US Federal Reserve and the Hong Kong Monetary Authority' of their
key interest rates last week.
Cheung Kong rose 2.20 hkd or 1.77 pct to 126.70, Sun Hung Kai was up 1.80
hkd or 1.28 pct at 142.3, Henderson Land flat at 61.2 hkd and Sino Land was up
0.5 hkd or 2.33 pct at 22.0.
Among local banks, Hang Seng Bank up 0.3 hkd or 0.19 pct at 159.2, BOC Hong
Kong up 0.05 hkd or 0.24 pct at 20.55, while Bank of East Asia down 0.25 hkd or
0.56 pct at 44.1.
Alibaba.com was down 0.96 hkd or 5.93 pct at 15.25 ahead of its
first-quarter results tomorrow.
"I believe the slump in its share price today has more to do with worries
about its first-quarter earnings more than Microsoft's decision to drop its
takeover bid for Yahoo," said Paul Woodward of information technology consulting
firm Business Strategies Group.
Microsoft announced on Saturday that it is dropping its bid for Yahoo due to
disagreement over price.
Yahoo owns 39 pct of Alibaba Group, Alibaba.com's parent.
Among other internet firms, Tom Group was up 0.03 hkd or 6.25 pct at 0.51
and Tencent was up 1.15 hkd or 2.05 pct at 57.2.
Maoye International was at 3.04 hkd, down from its IPO price of 3.10. The
mainland department store operator issued 862 mln shares at 3.10 per share in
its IPO, raising 2.67 bln hkd.
Angang Steel closed up 0.77 hkd or 3.95 pct at 20.25 after the reported
interest od Arcelor Mittal in picking up a stake.
"Angang's share price jump may be attributed in part to news about
ArcelorMittal's proposed investment in the company," said Becky Yuen, an analyst
at Dao Heng Securities Ltd.
"However, I doubt very much if the Chinese government will allow a foreign
investor to take a significant stake in a mineral resources company such as
Angang," she said.
The Financial Times reported that ArcelorMittal's CEO Lakshmi Mittal has
proposed to buy 25 pct of the state-controlled steel firm.
The proposal was made at a private meeting between Mittal and Angang
chairman Zhang Xiaogang a couple of months ago, the UK-based paper said.
Zhang turned down Mittal's proposal but he is willing toallow the
Luxembourg-listed firm to own a small stake of 1 or 2 pct, according to the
report.
Oil producers were higher after crude prices rose sharply on Friday.
CNOOC was up 0.14 hkd or 1.05 pct at 13.5 and PetroChina rose 0.02 hkd or
0.17 pct at 12.1.
Refiner Sinopec was also up 0.02 hkd or 0.23 pct at 8.71 on hopes of more
subsidies from the Chinese government.
Gold miners were mostly higher, with Zijin Mining up 0.03 hkd or 0.42 pct at
7.11, Zhaojin Mining up 0.5 hkd or 4.25 pct at 12.26 and Lingbao Gold up 0.05
hkd or 1.31 pct at 3.87.
The Hang Seng China Enterprises index closed down 5.87 points or 0.04 pct at
14,625.28.
(1 usd = 7.8 hkd)
roby.lau@xfn.com
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