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HK stocks end lower as Nasdaq fall rattles market

HONG KONG: Hong Kong stocks ended lower on Tuesday after Nasdaq's dive sent shivers through the local market, with investors leaving volatile high-technology counters and finding some refuge in banks.

The benchmark Hang Seng Index fell 2.15 percent or 363.08 points to 16,487.66, dragged down by market heavyweight China Telecom (Hong Kong) Ltd ahead of the release on Thursday of its final results for 1999.

Hong Kong's market was shaken on Tuesday after technology stocks plunged in the United States on Monday, with the Nasdaq suffering its second biggest one-day point decline.

Adding to the Hong Kong woes was slim trading volume, which makes high-technology stocks particularly vulnerable as much of their recent rise has been due to momentum buying.

"There is no good news to stimulate the market," said Patrick Chia, director at Kingsway SW Fund Management Ltd. "A lot of people are taking a wait-and-see attitude."

Tuesday's turnover at HK$9.5 billion was only slightly better than Monday's HK$9.3 billion, the slowest day this year.

China's dominant mobile operator, China Telecom (Hong Kong) Ltd, pulled the benchmark index lower when it slumped 5.2 percent or HK$3.50 to HK$64.25, accounting for 56 percent of the Hang Seng's fall.

China Telecom is set to report its final results for 1999 on Thursday.

"There's a bit of nervousness ahead of China Telecom's results," said Alan Hutcheson, head of research at Pacific Challenge Securities.

"Investors are concerned about the risk of big provisions against telecom systems that will need to be updated (in China's provinces)."

Other telecom-related companies joined the blue chip slide, with Hutchison Whampoa Ltd dropping HK$5.00 to HK$131.00 and Hong Kong's No. 1 telecom carrier, Cable & Wireless HKT, slipping HK$0.30 to HK$18.30.

Pacific Century CyberWorks <1186.HK>, the largest Internet firm in Asia outside Japan, lost 2.2 percent or HK$0.35 to HK$15.40.

Hong Kong's high-tech GEM index slipped 2.6 percent to 702.31, a 29 percent decline from its 1,000 start on March 20.

Banks defied the trend, taking comfort from a slight rise in the Dow Jones Industrial Average and from a bullish outlook for the economy, with the Hang Seng financial index finishing Tuesday up 0.74 percent.

"While lending is not growing strongly, we're seeing new lending," said Hutcheson.

HSBC Holdings Plc jumped HK$0.75 to HK$87.25 while Dao Heng Bank gained HK$0.70 to HK$36.30.

Electro-acoustic product maker Fujikon Industrial Holdings Ltd shrugged off a bearish market mood, which has sparked several IPO deferrals, to rise in its first session of trade on Tuesday.

"It makes something tangible and sells it at a profit," said Hutcheson. "It's not a tech stock that will be hit hard."

After debuting at HK$1.10 per share, higher than its issue price of HK$1.00, the stock leapt to HK$1.92 before finishing the day at HK$1.58.

Chinese oil giant PetroChina Co Ltd shone for the first time since its debut in Hong Kong on Friday as investors sought refuge from the high-tech turmoil.

"It's an 'old economy' stock and there's some switching between the old economy and the new," said Chia.

PetroChina rose 4.9 percent or HK$0.06 to HK$1.28.

Chinese computer maker Legend Holdings Ltd ended Tuesday up 3.7 percent or HK$0.45 at HK$12.50 on the back of news it was forming a Web partnership with Internet company Hollywood.com.ÑReuters