20000418

HK stocks suffer second biggest one-day point fall

HONG KONG: Bludgeoned by a US Nasdaq-inspired sell-off, Hong Kong blue chip stocks on Monday suffered their biggest one-day point drop since the Asian financial crisis rocked this territory in 1997 and investors nervously turned their gaze back to Wall Street.

The benchmark Hang Seng Index fell a staggering 1,380.39 points or 8.55 percent to 14,762.37. It was the second-largest one-day point drop ever recorded for the Hang Seng Index after a 1,438.31-point drop October 28 1997, when the Asian financial crisis shook the local market to its knees.

In the broader market, declines buried advances 725 issues to 23 and turnover reached a heavy HK$15.1 billion, up sharply from HK$11.62 billion on Friday. But even as the Hang Seng hit a new five-month low and staged its lowest close since November 18, 1999, bargain hunters stayed on the sidelines to wait and see if the technology-laden Nasdaq would slide further overnight.

"The big question for tomorrow is how much selling there is into a Nasdaq rally," said Michael Bugel, head of Hong Kong and China products at Jardine Fleming.

"We sort of levelled off after a big drop, but we did not see any good buying activity in the market. Nervousness still prevails and caution is the buzzword," he said.

Monday's rout was sparked by record one-day point drops in the three key US stock indices on Friday the Nasdaq, the Dow Jones Industrials and S&P 500. stumbling 9.67 percent, 5.66 percent, and 5.78 percent, respectively.

The Wall Street sell-off was triggered by worse-than-expected consumer price index data revealing that US inflation was running at its fastest rate in five years. The Hang Seng's low for the day, 14,624.33, was about 100 points above its 250-day moving average, indicating support at around the 14,500 level, analysts said.

"We're not signalling this as the harbinger of disaster," said Robert Rountree, head of research at Prudential-Bache Securities.

"We've been taking the view that this is a short, sharp bath," he added. "It's a bit too early to buy far too late to sell so leave it for a little bit to see what happens," he added. Technology shares were the hardest hit, with heavyweight cellular operator China Telecom (Hong Kong) Ltd ending down 15.23 percent at HK$51.50 and accounting for 43 percent of the index drop, according to Reuters 3000.

The Hong Kong price was a discount to the US$140 closing price of the cellular operator's US American Depositary Shares on Friday, a sign that further Wall Street declines were expected.

Each China Telecom ADS is the equivalent of 20 Hong Kong shares, so the on Friday price would translate to about HK$54.53 per Hong Kong share.

Internet high-flier Pacific Century CyberWorks hit a morning low of HK$12.80, but recovered by day's end to HK$13.75, for a decline of 14.33 percent.

PCCW's fall was not out of line with the 11.78 percent drop in Cable & Wireless, which finished at HK$16.85, giving analysts comfort that their multi-billion dollar merger deal would survive the market volatility.

Other young Internet firms found the going more difficult.

Hikari Tsushin International Ltd, the Hong Kong arm of the beleagured Japanese mobile phone subscription and Internet investment firm, led percentage declines among stocks, falling 36.97 percent to HK$0.75.

Internet venture capital incubation firm Techpacific.com could not have chosen a worse day for its trading debut, with its HK$1.05 issue price eroding to HK$0.45 by day's end.

The Growth Enterprise Index, stacked with new Internet issues that were soaring just a few weeks ago, plunged 12.76 pecent or 89.07 points to 609.03. The index was launched on March 20 at a base level of 1,000.

Banks and utilities fared the best among Hong Kong shares. Hongkong Electric managed to eke out a 0.84 percent gain to HK$24.00, while Hang Seng Bank declined just 1.43 percent to HK$69 and controlling shareholder HSBC Holdings ended down 1.72 percent at HK$85.50.

HSBC also managed to regain its title as the Hong Kong market's most valuable company, with a day-end market capitalisation of HK$723.19 billion versus HK$705.86 billion for China Telecom.-Reuters