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HK stocks close higher on Internet and telecoms

HONG KONG: Hong Kong stocks ended higher on Wednesday after a Nasdaq rebound on Wall Street buoyed media and Internet-related stocks and eased interest rate jitters stemming from the current US Federal Reserve policy meeting.

The benchmark Hang Seng Index rose 0.87 percent or 135.96 points to finish at 15,789.82 after hitting a high of 15,957.92.While the Hang Seng rose almost two percent at one juncture, investors sold stocks late in the day ahead of the Federal Open Market Committee meeting and the Chinese New Year holiday, traders said.

"Traders locked in profits before the Lunar New Year and as investors still remain sceptical about interest rate increases," said Andrew To, sales director and head of research at Tai Fook Securities.

On Tuesday, the US economy entered its longest expansion in history, its 107th month of uninterrupted growth.

Fed Chairman Alan Greenspan has expressed concern that labour scarcity could start a wage and price spiral if growth continues, so analysts expect the Fed to raise rates by 25 basis points in what is tipped to be the first of several rate rises this year. "If (Federal Chairman) Greenspan decides to rise rates by only 25 basis point, the market could easily break 16,000 tomorrow," said Alex Tang, research director at Core Pacific-Yamaichi International (HK) Ltd.

He added that if Greenspan raised rates by 50 basis points or more, the market would be hard-pressed to pass 16,000 this month.

"People would worry that Greenspan would raise rates another 50 basis points at its meeting scheduled in March." US/HK dollar forwards ended firmer on Wednesday, revealing a growing conviction that if the Federal Reserve raised US interest rates later on Wednesday, Hong Kong banks would have to follow suit next week.

Media stocks rose on the back of their content potential which is in great demand by Internet companies, especially after the merger of America Online and Time Warner Inc in January.

"Content providers are the hottest stocks," a trader at a European institution said.

The Hang Sang Commerce and Industry Index outperformed the main index, jumping 1.50 percent to 10,602.11, pushed up by Television Broadcasts and Pacific.

Television Broadcasts led media stocks, surging HK$10.50 or 17.65 percent to HK$70.00 after reaching a year high of HK$73.25.

The television programme producer has climbed since it said on January 17 that it planned a listing of TVB.COM on the Nasdaq or Hong Kong's Growth Enterprise Market (GEM). China Star Entertainment rose HK$0.07 or 5.98 percent to HK$1.24 after hitting a year high of HK$1.43 in early afternoon trade.

SCMP Holdings Ltd shares rose HK$0.45 or 6.87 percent to HK$7.00, but Paramount Publishing Group slipped HK$0.27 to HK$4.325 after hitting a year high of HK$5.00.

"We are recommending our clients to buy media stocks due to the potential of their valuable content on the Internet front," said Michael Ng, deputy managing director at Sassoon Securities.-Reuters