20000223

HK stocks end lower on China threat to Taiwan

HONG KONG: Hong Kong stocks fell on Tuesday for a fourth day after China's new threat to Taiwan prompted a sell-off and investors wait for direction from the U.S. market when it reopens after the holiday weekend.

The benchmark Hang Seng Index .HSI, which zigzagged from a high of 16,442.58 to a low of 15,776.35, ended Tuesday down 0.41 percent or 67.20 points at 16,255.17 after the index recovered some losses in a late rally. "The market fell in the morning after the comments China made against Taiwan, but now investors are pretty much looking at what the Dow is going to do tonight," said Joseph Ozorio, sales director at Lippo Securities.

Investors remained cautious ahead of Wall Street reopening after U.S. stocks slumped on Friday.

Beijing put the Hong Kong market under some selling pressure after it said on Monday it would be forced to use "drastic measures, including military force" if Taiwan indefinitely delayed negotiations aimed at reuniting with the mainland.

"The tension across the Taiwan Straits is a good excuse to sell down the market," said Stanley Ng, research manager at Mansion House Research.

The Chinese warning led to a rapid sell-off especially among red chip and high-tech stocks, but the market pared some of its losses as investors bought back into China Telecom (Hong Kong) Ltd China Telecom ended the day up HK$1.75 at HK$59.50 after falling as low as HK$54.75. "China Telecom and other telephone stocks rose because of short-covering," Ozorio said of the late session rally. "But investors are still worried about tech stocks in the U.S. and they're still nervous about the market."

A total of 107 issues rose and 638 fell on turnover of HK$21.68 billion, slightly lower than Monday's HK$21.71 billion.

High-tech stocks suffered with Pacific Century CyberWorks (PCCW) 1tumbling as investors took profit in the Internet firm after its recent rise on merger talk.

PCCW, the most active stock, fell 6.04 percent or HK$1.45 to HK$22.55 after hitting a low of HK$20.00.

PCCW has surged recently because of talk it would merge with Hong Kong's largest telecom carrier, Cable & Wireless HKT (C&W).

"Pacific Century is a market leader for high-tech stocks so if it drops, others follow," said Ng. "Pacific Century's price drop was worse than expected."-Reuters