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HK stocks end slightly up despite Wall St fall

HONG KONG: Hong Kong stocks erased early losses to end Thursday slightly higher despite an overnight drop on Wall Street and an expected interest rate hike in Hong Kong on Friday.

After tumbling to 16,525.56 in early trade as investors took profit after stocks slumped in the US the benchmark Hang Seng Index closed little changed from Wednesday's 3.60 percent surge.

The blue-chip index was up 0.15 percent or 25.71 points at 16,845.17 at the close. Turnover was again heavy at HK$23.4 billion, lower than Wednesday's HK$25.7 billion, but well ahead of December's average daily turnover of HK$12.6 billion. Declining issues beat advances, with 411 issues dropping and 304 climbing.

Selling of interest-rate sensitive stocks, such as banks and property companies, was countered by the strength of Cheung Kong (Holdings) Ltd, said Jerry Pang, institutional sales manager at HSBC SEcurities.The selling of financial stocks followed a pounding of banks on Wall Street as long bond yields rose, prompting concern the US Federal Reserve will hike interest rates at its next meeting in March.

On Wednesday, the Dow Jones Industrial Average suffered its eighth largest point decline.

The Hong Kong Association of Banks, which meets to review rates on Friday, is expected to raise the deposit rate by a quarter percentage point to 4.0 percent following the Fed's quarter point hike last week.

However an inflow of funds into Hong Kong has lessened the pressure on the banking group to raise local rates, money market dealers said.

"There's no sign of funds leaving us ahead of the Bank Association meeting tomorrow, but some investors want to trim down their exposure in banking and property counters," said Alex Tang, research director at Core Pacific-Yamaichi International (HK) Ltd.Dao Heng Bank Group Ltd dragged both the benchmark index and the banking group down, tumbling 4.02 percent or HK$1.40 to HK$33.40.

HSBC Holdings Plc followed, falling HK$0.75 to HK$90.00. Hang Seng Bank Ltd lost HK$0.75 to HK$70.25.

Among property companies, Sun Hung Kai Properties Ltd fell 2.67 percent or HK$2.00 to HK$73.00.China Telecom (Hong Kong) Ltd, which is the Hong Kong market's highest valued company after jumping almost 113 percent in the past three months, and nearly 19 percent this week alone, shrugged off early selling pressure to end down HK$0.25 or 0.39 percent at HK$64.00.

Television Broadcasts Ltd, which was another big gainer on Wednesday, lost 3.27 percent or HK$2.50 on Thursday to close at HK$74.00.-Reuters