20000226

HK stocks higher on telecoms, C&W HKT deal talk

HONG KONG: Hong Kong blue chip stocks ended higher on Friday on support from Hong Kong's two biggest telecoms plays amid widespread speculation that Pacific Century CyberWorks Ltd was nearing a deal to merge with Cable & Wireless .

The Hang Seng Index gained 142.32 points or 0.83 percent to close at 17,200.98 after bouncing between 16,905.40 and 17,414.46 in choppy trade. In the broader market, declines trounced advances 641 issues to 116, and turnover dipped to HK$17.03 billion from HK$17.99 billion on Thursday.

In a day that saw a sharp divergence between technology plays and much weaker property and banking counters, China Telecom (Hong Kong) Ltd led the market with a 4.92 percent gain to HK$69.25 and strong turnover of HK$1.6 billion.

It pushed up the blue chip index by nearly 182 points, according to Reuters 3000.

PCCW requested a suspension of its shares three minutes into on Friday's morning session, saying it would make a statement on Monday about its merger proposal with C&W HKT.

That pushed shares up 3.6 percent to close at HK$25.90 amid turnover of HK$1.02 billion.

Bankers in Hong Kong confirmed that had secured a bridging loan in the neighborhood of US$10 billion from four banks to support its bid.

Local newspapers reported that an offer of HK$8 in cash and one PCCW share for each share would be considered by the Cable & Wireless Plc board over the weekend.

Shares of Cable & Wireless Plc, which owns 54 percent of were up 3.36 percent in early London trade to 13.38 pounds.

Traders said anticipation of a deal may have helped push up China Telecom because the China wireless giant would see its weighting increase if a merger takes out of the Morgan Stanley Capital International China Free Index.

China Telecom is widely expected to be added to the index later this year.

"What we're seeing is a polarisation of the market," said Richard Offer, head of regional sales at Dresdner Kleinwort Benson Securities.

"People are nervous about what's been happening on Wall Street, so if it's not in technology or telecoms, it's in negative territory," he added. Most property shares were down ahead of next on Tuesday's government land auction except Sun Hung Kai Properties Ltd, which gained 2.75 percent to HK$74.75 on anticipation that the initial public offering of its SUNeVision Internet unit would receive a warm reception from institutional investors.

"In a nutshell, the investor preference is for the new economy and growth plays," said Jardine Fleming Hong Kong research director Steven Li, who added that Hong Kong was experiencing the same divergence between technology and traditional blue chips as the United States.

Overnight, the Nasdaq reached a new peak at 4,617.65 while the Dow Jones industrial average slid 1.3 percent to a four month low at 10,092.63.

Another factor driving the Hong Kong market, analysts said, was the expiry of on February Hang Seng Index futures: on Monday.

The February contract closed up five points at 17,150, while the on March contract gained 30 points to close at 17,170, both a slight discount to the cash market.-Reuters