HONG KONG (Thomson Financial) - Hong Kong shares finished a volatile morning
session little changed on Monday after investors locked in profits, capping
gains made earlier in the session driven by a better-than expected jobs report
in the U.S.
"Selling pressure in select stocks weighed on the overall market, limiting
the upside," said DBS Vickers investment manager Peter Lai.
The Hang Seng Index ended the morning 9.66 points higher at 26,250.68, off a
high of 26,387.37.
The benchmark index opened up at 26,321.61 on hopes that the impact of the
recent financial turmoil on the world's largest economy will not be as severe as
earlier feared, with sentiment helped by the latest Federal Reserve rate cut and
a dip in U.S. unemployment data.
"Investors firmly believe the worst is over in the global credit crisis.
Funds are starting to move away from commodities back into the equity markets,"
said KGI Securities research head Ben Kwong.
On Friday, Wall Street gained after the latest non-farm payroll data showed
20,000 jobs were lost in April, a far better result than the expected loss of
75,000 jobs.
Shares in Alibaba.com slumped 4.3 percent to HK$15.50 on news Microsoft had
withdrawn its $42.3 billion bid to buy Yahoo. Yahoo owns 39 percent of the
Alibaba group, the parent company of China's largest e-commerce portal.
"Investors had been buying this stock on hopes that Microsoft will buy into
Yahoo but with the acquisition failing to materialise, disappointed investors
are dumping shares," said KGI's Kwong.
CNOOC, China's largest offshore oil producer, was up 2 percent at HK$13.62
as global oil prices remained high after Friday's spike.
Crude oil jumped $3.80 a barrel to $116.32 on May 2 on fears of disruption
to production in Nigeria. The price had been dipping on the dollar's increasing
strength against the euro.
Asia's largest refiner China Petroleum & Chemical Corp fell 1.4 percent to
HK$8.57. Chinese refiners are affected by record-high oil prices as they are
unable to pass on the increased cost to their customers in China's regulated oil
price environment.
Airline stocks were higher, tracking their counterparts in Shanghai.
Air China gained 2.6 percent to HK$6.53 after rising 6.5 percent to 15.80
yuan in Shanghai. China Eastern Airlines was up 5.4 percent at HK$3.92,
following a nearly 10 percent jump to 11.79 yuan in the mainland. Investors were
buying bargains in the airline sector after recent sharp falls due to rising
crude prices.
China Unicom rose 1.8 percent to HK$17.28 after the South China Morning Post
reported, citing sources, that the long-delayed restructuring of the mainland's
telecom industry is expected to kick off on world telecommunications day on May
17.
According to media reports, the mainland's largest fixed-line provider China
Telecom is expected to acquire China Unicom's CDMA business, while China Netcom
is likely to buy its GSM service.
Index heavyweight China Mobile was down 0.1 percent at HK$136.
Angang Steel rose 3.7 percent to HK$20.20 after the Financial Times reported
that the mainland's second-largest steelmaker was in talks with ArcelorMittal
about a possible tie-up.
Indian billionaire Lakshmi Mittal, who is the CEO and owner of
ArcelorMittal, is reported to have proposed the purchase of a 25 percent stake
in the Chinese government-controlled steel company.
Angang chairman Zhang Xiaogang turned down Mittal's proposal but told the
newspaper he would be interested in allowing the Luxembourg-listed company a
smaller 1 percent to 2 percent holding in Angang.
Stocks that posted sharp gains on Friday, including local property issues
and Li & Fung, slipped as investor locked in profits. Hang Lung Properties was
down 3.1 percent at HK$32.70 while Henderson Land slipped 0.5 percent to
HK$60.90.
Li & Fung, which supplies consumer products to Wal Mart and other retailers,
slumped 4.8 percent to HK$31.75. The stock rose 3.4 percent on Friday following
the Fed rate cut earlier in the week.
($1 = HK$7.80)
leonora.walet@thomsonreuters.com
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lw/ng
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