HONG KONG (XFN-ASIA) - Share prices finished the morning session flat as the
market went into a consolidation mode after gaining nearly 15 pct since the
beginning of April.
The index opened firmer following better-than-expected US jobs and factory
orders data but lost steam by midmorning.
China telecom stocks were mostly higher after a report that sector
restructuring on the mainland could kick off as early as this month.
E-commerce firm Alibaba.com slumped over 4 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.
Maoye International Holdings, a mainland-based department store operator,
fell below its initial public offering price on its first day of trading.
The Hang Seng index ended the morning up 9.66 points at 26,250.68, off a low
of 26,167.80 and high of 26,387.37.
Turnover was 41.02 bln hkd.
Matthew Kwok, research head at Tanrich Securities, said the market is taking
a "healthy" pause after recent sharp gains.
"Some shares are facing strong resistance at current levels," he said,
noting that some locally-listed China firms have failed to fully match recent
gains in their peers on the mainland.
"The local benchmark index will likely consolidate around the 26,000
point-level and could correct several hundred points in the near term," Kwok
said.
"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 so far.
Dennis Poon, research head at South China Securities, said profit-taking
pressure is bound to arise after big gains last month.
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 was up 0.10 hkd or 0.07 pct at 136.40, 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.
China telecom stocks were mostly higher after the South China Morning Post
reported that 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 newspaper said.
China Unicom was up 0.30 hkd or 1.77 pct at 17.28, China Telecom was up 0.02
hkd or 0.37 pct at 5.41 and China Netcom was up 0.20 hkd or 0.81 pct at 24.95.
China Mobile was down 0.10 hkd or 0.07 pct at 136.0 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.
Poon of South China Securities said "it's understandable for China telecom
counters to attract buying interest as we get more news about the proposed
restructuring in the sector."
"However, we've getting all sorts of rumors over the past year or so and
there is still no definite date when the restructuring will actually start. I
won't be surprised if some investors take profit later," he said.
China financials were mostly weak, with ICBC losing 0.09 hkd or 1.43 pct at
6.20, China Construction Bank down 0.01 hkd or 0.14 pct at 7.18, Bank of China
flat 4.06 hkd and Bank of Communications was up 0.02 hkd or 0.17 pct at 11.48
hkd.
Oil producers were higher after crude prices rose sharply on Friday.
CNOOC was up 0.26 hkd or 1.95 pct at 13.62 and PetroChina rose 0.04 hkd or
0.33 pct at 12.12, while refiner Sinopec was down 0.12 hkd or 1.38 pct at 8.57.
Gold miners were mostly higher, with Zijin Mining up 0.07 hkd or 0.99 pct at
7.15, Zhaojin Mining up 0.32 hkd or 2.72 pct at 12.08 and Sino Gold up 1.10 hkd
or 3.02 pct at 37.55.
Properties were mostly higher despite local banks' decision not to follow
cuts by the US Federal Reserve and the Hong Kong Monetary Authority's moves in
their key interest rates last week.
Cheung Kong rose 1.80 hkd or 1.45 pct to 126.30, Sun Hung Kai was up 1.50
hkd or 1.07 pct at 142.0, Sino Land was up 0.35 hkd or 1.63 pct at 21.85 and New
World gained 0.15 hkd or 0.7 pct at 21.55.
Henderson Land bucked the trend, losing 0.30 hkd or 0.49 pct at 60.90.
The property sector index was up 151.21 points or 0.46 pct at 33.306.77.
Alibaba.com was down 0.70 hkd or 4.32 pct at 15.50 ahead of its release of
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, principal at 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 0.02 hkd or 4.17 pct at 0.50
and Tencent was up 1.20 hkd or 2.14 pct at 57.25.
Maoye International was at 3.08 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.
"Compared to its mainland peers, its share price is expensive," said South
China Securities' Poon.
The Hang Seng China Enterprises index ended the morning down 17.33 points or
0.12 pct at 14,613.82.
(1 usd = 7.8 hkd)
george.ng@xfn.com
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