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HK stocks close lower, rate fears dampen index

HONG KONG: Hong Kong stocks closed lower on Thursday after a choppy session in which investors sought out safe and undervalued stocks and avoided interest rate risk.

The Hang Seng Index closed 60.03 points or 0.39 percent down at 15,215.31. Turnover was HK$16.59 billion (US$2.13 billion) compared with HK$15.55 billion on Wednesday.

Traders said sentiment was jittery, marked by a flight to quality sparked by volatile trading in a day in which the index traded as low as 15,078.03 and up to 15,347.70.

"I think the traders out there are just testing the range both ways," said HSBC Securities institutional sales manager Jerry Pang.

Pang said interest rate-sensitive stocks were out of favour, with investors seeking out undervalued or oversold stocks, including Johnson Electric Holdings Ltd, Swire Pacific Ltd and Cathay Pacific Airways Ltd

"People are definitely more cautious now," said Howard Gorges, a director with South China Securities.

Traders and analysts said the market had more downside than upside until the interest rate uncertainty was removed, and could test 14,800 short term.

The U.S. Federal Open Market Committee is reviewing interest rates at its February 1-2 meeting, which is expected to result in a rate rise of at least 25 basis points.

"People are still trading in a very narrow range," said Peggy Ho, assistant sales director with Capital Securities (HK) Ltd.

In the broader market, declines outpaced advances by 405 to 249, with 261 issues unchanged.

January Hang Seng Index futures ended up 110 points at 15,310, a 94.69-point premium to the cash market.

Investors' interest rate concerns were reflected in the finance index, which was down 214.08 points or 1.11 percent at 19,017.46, outstripping the benchmark index in percentage terms.

Among the blue chips, Hutchison Whampoa Ltd regained favour to end up HK$2.50 or 2.44 percent at HK$105.00, and Johnson Electric was up HK$4.25 or 7.73 percent at HK$59.25.

Gains by Hutchison and Johnson Electric helped offset the benchmark index falls by 61.53 points between them.

Swire was up HK$1.80 or 4.76 percent at HK$39.60 while sister company Cathay was up HK$0.35 or 2.67 percent at HK13.45.

Cheung Wah Development Co was a stellar performer, closing up HK$8.47 or 636.84 percent. It said on Thursday that Softbank Corp unit Softbank Investment (International) Holdings Ltd would pay HK$207.5 million for a controlling stake.

CCT Telecom was down HK$0.85 or 16.83 percent at HK$4.20. It said on Thursday it raised net proceeds of HK$904 million through a placement of 200 million shares at HK$4.60 a share.

Heavyweight HSBC Holdings was down HK$1.50 or 1.61 percent at HK$91.75 on turnover worth HK$994 million, the third most actively traded stock.-Reuters