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HK stocks end lower on Taiwan tension and techs

HONG KONG: Hong Kong stocks fell on Thursday for a fourth day as the market continued to be buffeted by a global sell-off in techs and the latest Chinese threat towards Taipei ahead of Saturday's Taiwan presidential election.

The Hang Seng Index shed 2.32 percent or 388.20 points to 16,359.00 and is now down 3.6 percent since the start of the year. "People are starting to warm up for the Taiwan election and suddenly it looks like an overvalued market," said Michael Liang, vice president of Asian equities at Daiwa Securities.

"We also have the FOMC meeting next week and the US PPI figures on Thursday. It's all coming at once." On Wednesday the Taiwanese government had to rescue a panic sell-off in Taipei stocks after Chinese Premier Zhu Rongji made some blunt warnings to voters and repeated Beijing's threat to use force to prevent the island breaking away.

"Zhu's comments did nothing to help sentiment in the greater China market with China Telecom pushing the market down," said Markus Rosgen, regional equities strategist at ING Barings.

Investors use the Hong Kong market to gain exposure to China, so they are trying to retreat from the latest war of words, Rosgen said. China Telecom (Hong Kong) Ltd, which is used by fund managers to enter the Chinese market, accounted for over half of the index's fall, according to Reuters 3000.

China Telecom skidded 5.28 percent or HK$3.50 to HK$62.75. Chinese-backed companies and state owned enterprises listed in Hong Kong were hit, with the red chip index down 4.92 percent and the H-share index down 3.58 percent.

China's largest personal computer maker, Legend Holdings Ltd dragged red chips down, falling 9.1 percent to HK$11.50. Other high-tech stocks were hit by the Nasdaq's third day of losses.

"Overseas indexes affected the whole Hong Kong performance, especially high-tech, as investors picked the stronger fundamentally driven sectors," siad Vivian Kwok, head of research at Sassoon Securities. Telecom-related Hutchison Whampoa Ltd, which has gained 31 percent over the last three months on the telecoms frenzy, slumped 4.07 percent or HK$5.50 to HK$129.50. Hutchison's parent Cheung Kong (Holdings) Ltd skidded HK$3.50 to HK$100.50.

SmarTone Telecomunications Holdings resumed on Wednesday's fall on a disappointing earnings report and ended down HK$0.75 at HK$28.55. Blue chip media company Television Broadcasts Ltd skidded HK$2.25 to HK$67.75 while Internet firm Pacfic Century CyberWorks lost HK$0.65 to HK$19.95. Mobile phone operator SUNDAY Communications Ltd, which debuted on Thursday at HK$4.50 per share, ended at HK$3.57, below its issue price of HK$3.78.

Despite investor concern about a possible interest rate hike next week in the US, rate-sensitive banks and underperforming utilities helped the Hang Seng stave off further losses. Hang Seng Bank Ltd led the way among banks, jumping 1.9 percent to HK$66.50. -Reuters