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HK stocks close down, rate jitters weigh on market

HONG KONG: Hong Kong stocks closed lower on Friday, with investors unnerved by fears that US interest rates might rise more than expected in coming months. The blue chip Hang Seng Index closed down 91.73 points or 0.59 percent at 15,542.23.

In the broader market, turnover was HK$17.51 billion compared with HK$15.18 billion on Thursday. Declines outpaced advances by 379 to 285, with 248 issues unchanged.

Traders said a holiday in the US on Monday, December consumer price index data later on Friday and hawkish comments by Federal Reserve Chairman Alan Greenspan hurt sentiment. They said they were surprised by the market's resilience late in the day, when it bounced back after being down almost two percent, saying they saw more downside than upside short-term. "Hong Kong should have been off a little bit more than it is," said a senior institutional salesman at a US investment bank, predicting US markets would ease tonight on Greenspan's speech in New York and ahead of Monday's market holiday.

Greenspan said the Fed would support higher interest rates to defuse mounting imbalances in the booming US economy. The benchmark index continued its recent pattern of choppy trade, veering between negative and positive territory in the morning, with trading focusing on a few select blue chips.

"It's been a bit volatile today," said South China Securities director Howard Gorges. "People are selling into strength and buying on weakness."

Late on Friday, the January futures contract was quoted down 210 points at 15,420, a 122.23-point discount to the cash market.

"We saw some pretty aggressive selling in the futures," said Credit Suisse First Boston head of Asian sales trading Jonathan Gurnsey, predicting that the market could re-test its lows of the first week of January in coming weeks.

Gorges said the market was concentrating on a few big stocks, exaggerating volatility.

Reflecting the more cautious mood of some investors, the utilities index closed up 209.52 points or 1.12 percent at 18,869.65.-Reuters