HONG KONG (Thomson Financial) - Hong Kong shares were slightly lower in
early trade on Friday, in line with sluggish sessions in other regional bourses
after oil prices scaled another peak overnight.
Oil prices swept past $124 a barrel in late New York Mercantile Exchange
trading on Thursday, although the OPEC Cartel said there was no shortage of the
commodity and the prices were being driven up by speculators.
"The local market hasn't reacted to the surge in oil prices in a big way
yet but as inflation mounts in other markets, particularly on the mainland, Hong
Kong will start to feel the impact. If China raises (its interest) rates yet
again, we will see another sharp correction here," said Andrew Clarke, trader at
SG Securities.
Investors were also cautious ahead of the extended weekend in Hong Kong,
with Monday being a public holiday.
The Hang Seng index was down 36.99 points or 0.2 percent at 25,412.80, after
opening at 25,401.91. The index rise to 25,483.76 briefly as the rally on
mainland bourses supported certain locally-listed Chinese stocks.
Turnover was HK$7.13 billion.
A spike in the Ping An Insurance stock helped trim the market's overall
losses after the insurer said it will not proceed with its mega share and bond
sale for at least six months, given the volatility in mainland markets.
"While the planned issue has clearly not been cancelled, six months is
arguably such a
long time in the Hong Kong and Shanghai equity markets that investors will have
to refocus on operational news flow," said CLSA in a note to investors.
Ping An Insurance gained 1.4 percent at HK$70.50 after touching a high of
HK$71.50 earlier. The stock was up nearly 4 percent on the Shanghai market,
largely driving the rebound in the Shanghai Composite Index.
The Shenzhen-based insurer bowed to market pressure after its shares were
sold down earlier this
week on reports that it will go ahead with its aggressive 160 billion yuan
($22.9 billion) fund-raising
plan when sentiment in Chinese markets improves.
Asia's largest refiner China Petroleum & Chemical Corp (Sinopec) retreated
2.3 percent to HK$7.69 as rising crude oil prices are feared to squeeze its
refining margins. Sinopec has plunged more than 9 percent so far this week.
PetroChina, the mainland's largest oil and gas producer, which also has
refining operations, slipped 0.9 percent to HK$11.08.
Upstream oil pure play CNOOC, which has gained over 5 percent since last
Friday's close, moved up a further 1.4 percent to HK$14.22.
Wing Lung Bank extended its gains after reports on Thursday said China
Merchants Bank has re-entered the bidding process for the Hong Kong-based bank.
The stock edged up 0.7 percent to HK$139.80.
The mainland's sixth largest lender was down 0.5 percent at HK$30.50 on
caution over the acquisition cost.
China Merchants' renewed involvement could push up the final size of the
deal to as much as $5 billion, the Wall Street Journal reported earlier.
Standard Chartered came under further selling pressure, down 0.4 percent at
HK$278.40 after retreating 2.7 percent yesterday. The U.K.-based bank said it
was writing down $97 million on its asset-backed securities portfolio.
Chinese telecom stocks continued to move higher on market talk that Beijing
is likley to announce an industry restructuring on May 17, coinciding with
World Telecommunications Day.
China Unicom, the smaller of the mainland's two mobile phone operators, rose
2.5 percent to HK$17.30. Fixed-line operators China Netcom gained 1.8 percent at
HK$25.60, while China Telecom was up 2.2 percent at HK$5.66.
Asia's largest wireless carrier China Mobile added 0.6 percent to HK$132.
The company said it remains interested in the African market although it has not
submitted a bid for South Africa's leading telecom operator MTN Group, the South
China Morning Post reported.
($1 = HK$7.80, 7 yuan)
parvathy.ullatil@thomsonreuters.com
.
pu/nt
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