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HK stocks close at record as Y2K fears dispelled

HONG KONG: Hong Kong stocks closed at a record high on Monday, as investors sidelined by year-2000 fears piled back in with a vengeance.

The Hang Seng Index closed up 407.53 points or 2.40 percent at 17,369.63. Turnover was a hefty HK$18.03 billion, up from HK$12.40 billion last Thursday, the last trading day of 1999.

In the broader market, 463 issues posted gains, including 89 records, compared with 211 declines. The market hit an intraday record 17,426.16 after lunch, before retreating by the close.

Traders said institutional investors worried about Y2K glitches were re-entering the market.

"It's the New Year/Y2K rally," said Geoff Galbraith, deputy head of institutional sales at Dao Heng Securities.

"They (institutions) are reopening their books and deploying the cash they have got left from Y2K," said Vickers Ballas sales director Antony Mak.Among blue chips, China Telecom (Hong Kong) Ltd rose HK$4.90 or 10.08 percent to HK$53.50, and Hutchison Whampoa Ltd HK was up HK$3.50 or 3.10 percent at HK$116.50.

CS First Boston Asian sales head Jonathan Gurnsey said China Telecom and Hutchison were in demand as telecom plays.

China Telecom contributed 304.26 points to the blue chip index, while Hutchison contributed 61.45 points, according to Reuters 3000.

But turnover in the two blue chips accounted for just HK$713.17 million or 3.95 percent of broader turnover, with the 10 most active stocks dominated by technology plays.

Pacific Century CyberWorks (PCCW) was up HK$1.55 or 8.56 percent at HK$19.65 on turnover of HK$2.14 billion or just under 12 percent of the total market.

PCCW and Japan's Hikari Tsushin will hold a briefing on Tuesday about their subscription agreement with electronic parts maker Golden Power International Holdings Ltd. PCCW said last week it would buy 20 percent of Golden Power, while Hikari is to take up 51 percent of Golden Power.

Traders said investors believed that PCC's Internet strategy was starting to fall into place. "These guys are just going to go from strength to strength to strength," Gurnsey said. He said CSFB had just put out a report describing PCCW as Asia's "e-infrastructure play, ex-Japan."

Elsewhere among technology plays, Wang On Group Ltd was up HK$1.32 or a dizzying 150 percent at HK$2.20 despite saying on Monday it did not plan to spin off a website joint venture and was not talking to Yahoo! Inc.

But the technology-heavy Growth Enterprise Market (GEM) market did not fare so well, with SIIC Medical Science and Technology (Group) Ltd closing unchanged at HK$2.025, but the other six GEM stocks all closing lower.

Traders said retail investors seeking technology plays preferred the more familiar main board companies.

"They're going for blue chip 'gems'... the bigger, bigger high-tech stocks," Dao Heng's Galbraith said.

Sun Hung Kai Properties Ltd was up HK$2.75 or 3.40 percent at HK$83.75. It said on Monday it would invest HK$1 billion in local Internet service centres.

HSBC closed down HK$1.00 or 0.92 percent at HK$108.00. The banking heavyweight said on Friday it had completed its purchase of Republic New York Corp and Safra Republic Holdings.-Reuters