20000113

HK stocks end down on Nasdaq, interest rate fears

HONG KONG: Hong Kong stocks closed lower on Wednesday as interest rate fears and a big overnight loss on the technology-heavy Nasdaq unnerved investors.The benchmark Hang Seng Index closed down 147.90 points or 0.93 percent at 15,714.20 but off its lows when it was down almost two percent.

Turnover was a relatively meagre HK$14.44 billion (US$1.86 billion), down from HK$19.81 billion on Tuesday. Traders and analysts said investors were confused by the gyrations of the Nasdaq, which fell 128.48 points or 3.17 percent to 3,921.19 overnight on Tuesday,one day after logging its biggest points gain. "People just don't know what to do. I actually agree with them," said a senior institutional salesman at a U.S. investment bank.

Another solid overnight fall tonight on the Nasdaq would be ominous from a technical point of view, he said, predicting that activity would wind down over coming weeks.

"The volume will drain as retail people who have been quite active take a wait-and-see attitude. They will have been getting a little bit more nervous," the salesman said, adding that Hong Kong's prospects for a traditional Lunar New Year rally were looking increasingly remote.

"People are not as aggressive as they were," said South China Securities director Howard Gorges.

In the broader market, declines outpaced advances by 359 to 290, with 260 issues unchanged.

Analysts and traders said activity is increasingly limited to selective buying by institutions.

Credit Suisse First Boston head of Asian sales trading Jonathan Gurnsey said he had noted some Asian funds buying utilities and other safe haven stocks.

Gurnsey said the market's losses would have been higher in the morning but for some short-covering that provided support.

The utilities index closed barely changed, down 0.37 points at 18,747.34, the most resilient of the major indices.

Interest rate fears hurt the finance sector, with the finance index losing 365.46 points or 1.81 percent to 19,792.63.

Pacific Century CyberWorks Ltd was the most active, down HK$0.50 or 3.03 percent at HK$16.00 on turnover of HK$1.15 billion, or almost eight percent of the broader market.

Combined red and blue chip China Telecom Hong Kong Ltd lost HK$1.40 or 2.89 percent to end at HK$47.00 on turnover of HK$657.81 million. It contributed 86.88 points to the benchmark index's overall losses, according to Reuters 3000.

Gorges said China Telecom was popular with traders because it combined a heavy index weighting with a relatively small public float making it an easy way to buy or sell the index.

Heavyweight HSBC Holdings was down HK$1.75 or 1.79 percent at HK$96.25 on turnover of HK$708.80 million.

However, Union Bank of Hong Kong Ltd was up HK$0.30 or 4.44 percent at HK$7.05 and CITIC Ka Wah Bank Ltd was up HK$0.25 or 8.26 percent at HK$3.275.

Reuters