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HK stocks seen easing on Dow weakness

HONG KONG: Interest rate fears and Friday's sharp drop on Wall Street will weigh on Hong Kong stocks this week with top-performing tech and telecom shares likely to take a breather.

The volatile Hang Seng Index touched a record high on Monday, vaulting to 17,939.27 but quickly fell, ending the week down 781.14 points or 4.5 percent, at 16,559.16.

On Friday alone, the Hang Seng Index plunged 382.07 points or 2.25 percent at 16,599.16 after U.S. Federal Reserve Chairman Alan Greenspan said on Thursday a substantial rise in interest rates may be needed to tame the U.S. economy.

"It is totally dependent on the U.S. market," said John Schofield, regional technical strategist at Prudential Bache.

Greenspan's remarks also unnerved Wall Street, sending the Dow Jones Industrial Average dropping 295.05 points or 2.81 percent on Friday to end at 10,219.52. The Nasdaq fell 3.02 percent at 4,411.74.

Hong Kong's interest rate-sensitive property and finance sectors were expected to ease further this week, with investors sidelined over HSBC Holdings and Hang Seng Bank ahead of the banks' 1999 earnings reports on February 28.

But a broad sell-off was unlikely as some stocks, such as Sun Hung Kai Properties and Henderson Land, had already undergone critical downward revaluations of their asset values and were now being upgraded by analysts, said Abijhit Chakrabortti, strategist at HSBC Securities.

Most of the market's leaders were likely to consolidate recent gains. China Telecom (Hong Kong), which hit a record high of HK$72 last Monday, ended the week down HK$2.50 or 4.1 percent at HK$58.50.

"China Tel is down 20 percent from the top and the other leaders are off quite a lot, but the rest of the market is pretty well protected."

Hutchison slid HK$2.50 or 2.02 percent to HK$121.50 and Cheung Kong tumbled HK$4 or 3.70 percent to HK$104.

Cable and Wireless HKT bucked Friday's downtrend to add HK$0.20 or 0.79 percent to close at HK$25.65.

The share was below its high of HK$27.65 set on Monday when it resumed trading amid acquisition interest from more than one bidder.

Singapore Telecommunications Ltd said it was continuing talks with parent company Cable and Wireless Plc, after Pacific Century CyberWorks Ltd disclosed it had also approached the parent company about taking a stake in C&W HKT.

Keen local investor interest in fledgling Internet portal tom.com Ltd could pull funds from the market, brokers said.

The subscription period for the company, the latest initial public offering on Hong Kong's Growth Enterprises Market, will end on Friday, February 25. The share will be listed on March 1.

Only 10 percent of the IPO's 428 million shares will be offered to the public in Hong Kong. The company will be 16.15 percent owned by Cheung Kong and 32.29 percent by Hutchison after the offer.-Reuters