20000323

HK stocks end higher on earnings outlook and Fed

HONG KONG: Hong Kong stocks ended higher on Wednesday, led by banks and developers, on the heels of a US rally and ahead of positive earnings outlooks for several blue chips.

The benchmark Hang Seng Index ended near the highs of the day, up 2.02 percent or 347.06 points at 17,547.04 amid optimism the Federal Reserve's quarter point hike on Tuesday showed the US interest in moving pre-emptively on inflation. "When the central bank moves very quickly it means it has confidence in the economy and that it will nip inflation in the bud," said Alan Chen, sales trader at Nomura Securities.

"That's a positive thing as it takes the duress out of market. Everyone expects it, so let's get on with it."

Interest rate-sensitive stocks, which have been in the shade as investors piled into high-flying technology stocks, led the charge early in the day following Wall Street's positive response to the Fed move.

"Banks have been so oversold recently that 'old economy' value stocks are now being snapped up left, right and centre," Chen said.

Hong Kong's largest bank, HSBC Holdings Plc, which has dropped 17 percent in the past three months, rose HK$2.00 or 2.3 percent to HK$89.50.

"HSBC is rock-bottom cheap especially since we've got this interest rate negatively out of the way for a little while," said Peter Redhead, head of HK research securities at Jardine Fleming. Blue chips were also boosted by expectations of good results when they report this week, analysts said.

"It's a big week for Henderson, Cheung Kong and Hutchison," said Chen. "A lot of professionals are anticipating good earnings growth, especially from the base of the previous year of the Asian financial crisis."

Hutchison Whampoa Ltd and its parent Cheung Kong (Holdings) Ltd rose ahead of their year-end results due Thursday.

Hutchison rose HK$3.00 to HK$138.50 while Cheung Kong, which is seen as a cheap way into Hutchison, jumped HK$4.00 to HK$112.00.

Also buoyed by earnings optimism was television programmer Television Broadcasts Ltd (TVB) which added HK$2.75 to HK$70.00.

TVB announces its year end results on Wednesday. Hong Kong's largest market cap company, China Telecom (Hong Kong) Ltd staged a late recovery, bouncing up HK$2.25 to HK$75.00.

Among high-tech plays, Pacific Century CyberWorks (PCCW) fell for a second day, prompting investors to worry that a continuing fall could jeopardise its merger with Cable & Wireless.

"Key institutions are selling down," said Chen of PCCW's tumble.

which has fallen from a high of HK$28.50 on February 15 and fell through a HK$20.00 support level on Tuesday, closed down 2.09 percent or HK$0.40 at HK$18.70.

C&W HKT fell alongside PCCW, losing HK$0.15 to HK$20.70.

Redhead expected a pick-up in instituational buying now that interest rate uncertainity is out of the way for now, and people felt more comfortable about relations between Taiwan and China.

Turnover at HK$11.1 billion was the second lowest of the year, according to the Hong Kong Stock Exchange.

"We need a revival in the smaller cap stocks to bring the interest back in," Redhead added. -Reuters