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HK stocks end lower, Microsoft dampens high-techs

HONG KONG: Hong Kong stocks fell on Monday for the fourth trading day as investors fled from high-tech stocks on expectations that Microsoft Corp could drag US indexes down after talks to settle its antitrust case failed.

The benchmark Hang Seng Index fell 2.95 percent or 513.61 points to 16,892.93 after a brief interlude in positive territory, with investors piling out of volatile technology and telecoms stocks as bad news continues to besiege the sector. Hong Kong's technology sell-off spread through the entire market from blue chip telecom stocks to fledgling "dot.coms" recently listed on the market.

Even "old economy" stocks that have saved the day more than once in recent times offered no refuge for investors.

At the end of Monday's trade only 73 issues were ahead while 656 had fallen on slim turnover of HK$10.7 billion, far less than the daily average of HK$18.1 billion for the past three months.

"We've got the Nasdaq worry, a general tech correction, a liquidity outflow and a possible kneejerk reaction on Wall Street tonight on Microsoft," said Michael Liang, vice president of Asian equities at Daiwa Securities.

"Overall people are nervous."

Microsoft is expected to fall by about 10 percent when US markets open after mediation talks in its landmark antitrust case collapsed, analysts in the United States said.

Microsoft's news adds to the woes of an already battered global sector following cautionary comments by several US market gurus last week and the demise of US hedge fund company Tiger Management LLC. Market heayweight China Telecom Ltd led the blue chips telecoms sell-off, falling 2.6 percent or HK$1.75 to HK$66.50.

Hutchison Whampoa Ltd, which has extensive telecoms interests, fell HK$3.00 to HK$137.50, while its parent Cheung Kong (Holdings) Ltd dropped HK$6.00 to HK$110.50.

Cable & Wireless (C&W HKT) followed Pacific Century CyberWorks (PCCW) down after the Internet firm, which is due to merge with, fell heavily in line with its Japanese Internet-related counterparts.

"The tech stock weakness is led by what happened with Microsoft and with Hikari and Softbank," said David Williamson, sales director at China Everbright Securities.

PCCW skidded 7.7 percent or HK$1.40 to HK$16.80, its lowest level since it hit HK$16.50 on January 26.

Hong Kong's dominant telecom carrier, lost 6.1 percent or HK$1.25 to HK$19.15.

Hong Kong-listed subsidiares of Japanese Internet investment giants Hikari Tsushin Inc and Softbank Corp accompanied their parents downwards.

Softbank Investment International plummeted 22.9 percent to HK$4.55 while Hikari Tsushin International Ltd slumped 24.1 percent to HK$5.50. Hong Kong's high-technology GEM index resumed its descent, dipping to a new low since its launch on March 20, as investors continued to flee from "dot-com" shares.

"Some of these firms have no assets, no earnings and no credit record," said Liang. "People wamt money for their business."

The GEM index lost 13.1 percent to end on Monday at 772.60, just off its low of 766.75. The GEM has lost 23 percent since its launch.

E-commerce applications firm iMerchants Ltd, which saw its shares debut on Friday one cent above their HK$1.48 IPO price, led the decline, dropping 30.2 percent or HK$0.45 to HK$1.04.

Tom.com Ltd lost 16.2 percent or HK$1.75 to HK$9.05.

While held the market up in early trade on news that British parent HSBC Holdings Plc made a friendly US$10.6 billion takeover offer for French bank Credit Commercial de France the local bank's shares later fell 3.8 percent or HK$3.50 to HK$87.50.

Among China plays, the red chip index lost 7.38 percent to 1,411.68.

Because on Tuesday is a holiday in Hong Kong, financial markets will be closed, and investors will have to wait until on Wednesday to see how technology shares fare in overseas markets. -Reuters