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HK stocks end lower, C&W HKT leads blue chips down

HONG KONG: Hong Kong stocks closed lower on Tuesday as investors piled out of Cable & Wireless HKT and other blue chip telecoms-related stocks that have surged in recent days.

The benchmark Hang Seng Index fell for a second day, losing 2.91 percent or 500.80 points to 16,688.16, after falling as low as 16,548.75."Large-cap index stocks such as Hutchison and HongKong Telecom (C&W HKT) which have risen substantially recently are correcting," said Kelvin Tang, analyst at ImPac Asset Management (HK) Ltd.

Tuesday's turnover of HK$35.74 billion was the heaviest since August 1998, when the government intervened massively in the markets to thwart speculators against the Hong Kong dollar.

Investors flocked out of C&W HKT on Tuesday, taking profit after the telecoms carrier jumped 50 percent when talk of a second bid for it began on Friday.

On Tuesday fell the heaviest among Hang Seng stocks, slumping 7.00 percent or HK$1.85 to HK$24.55.

"When a blue-chip stock goes up 50 percent, a seven or eight percent fall is normal for profit-taking," said Tang. Pacific Century CyberWorks, whose shares resumed trading after they were suspended on Friday amid talk of a bid for finished on Tuesday up 6.89 percent or HK$1.70 at HK$26.35.

PCCW, Asia's largest Internet company outside of Japan, was one of the most actively traded stocks on the market and hit a record of HK$28.50.

PCCW put in a bid for C&W HKT three weeks after Singapore Telecommunications Ltd (SingTel) announced it was in talks with Hong Kong's largest telecom carrier.

Singapore Telecommunications has said it is continuing merger talks with C&W HKT.Gains by PCCW were offset by losses among telecom-related companies.

Many of them hit record highs last Friday when they were buoyed by talk of a second bid for C&W HKT and after investors re-rated the value of cellular stocks after the Vodafone Airtouch Plc and Mannesmann merger.

"The index stayed at a high level mainly because of the strength of telecoms shares, but telecoms stocks are now under pressure," said Ben Kwong, associate director at KGI Asia Ltd.

Hutchison Whampoa Ltd and its parent Cheung Kong (Holdings) Ltd which both hit highs on Friday, dragged the blue-chip index down.

Hutchison, which has a 10.2 percent stake in Mannesmann, lost 5.70 percent or HK$7.50 to HK$124.00. Cheung Kong dropped 5.67 percent or HK$6.50 to HK$108.00, also dragging the Hang Seng properties index lower.

China Telecom (Hong Kong) Ltd, which also hit a record high last week on the telecoms euphoria, lost HK$2.75 to HK$63.25.

SmarTone Telecommunications Holdings Ltd skidded 5.72 percent or HK$1.90 to HK$31.30. Utilities, red chips and mid-cap stocks bucked the blue-chip slide, as investors pulled out of technology and telecom-related stocks.

"Investors are switching from stocks which have experienced substantial upside to laggards with potential for the Internet, especially small to mid-cap stocks," said Tang.

The Hang Seng utilities index rose 1.61 percent, pulled up by HK & China Gas, while the midcap index jumped 2.43 percent, with Leading Spirit Electric Co pushing the group up.

Shares of China-backed companies based in Hong Kong gained, with the red-chip index rising 3.3 percent to 1,453.54.

China's largest computer maker, Legend Holdings Ltd, buoyed the red-chip index, jumping 10.32 percent or HK$3.20 to HK$34.20.

Legend said on Monday it proposed subdividing each of its existing issued and unissued shares into four shares, and raising its authorised share capital to HK$500 million from HK$230 million.

In the broader market, a total of 363 issues rose while 365 declined.-Reuters