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HK blue chips end higher on telecoms support

HONG KONG: Hong Kong blue chips edged to a higher close in choppy trade on Monday as support from key telecoms stocks was tempered by caution over interest rates and a U.S. trading holiday.

The blue chip Hang Seng Index finished up 32.33 points or 0.21 percent at 15,574.56 after reaching an early morning high of 15,827.51 in reaction to Wall Street's strong Friday gains.

But that initial optimism over mild U.S. Consumer Price Index data proved short-lived as interest rate concerns crept back into the local market.

U.S. markets close on Monday for the Martin Luther King Jr holiday, denying investors a confirmation of Wall Street's uptrend.

"The strong U.S. rally didn't excite the Hong Kong market today," said William Li, research manager at Celestial Asia Securities. "Investors are still worried about an interest rate hike early next month, so buying interest was low."

Hong Kong turnover on Monday was HK$12.98 billion (US$1.67 billion), down from HK17.51 billion on Friday. In the broader market, declines beat out advances 356 issues to 283.

Holding blue chips above water were China Telecom (Hong Kong) Ltd and Cable & Wireless, which together added more than 78 points to the index, according to Reuters Securities 3000.

China Telecom rose HK$1.00 or 2.3 percent to HK$44.70 in reaction to the company's announcement on Sunday that Chinese authorities would reduce its digital transmission line leasing fees on the mainland by 20 percent.

Cable & Wireless added1.43 percent to HK$21.30, largely on speculation that Britain's Cable and Wireless Plc might sell down its 54 percent holding in the dominant Hong Kong telecoms provider, traders said.

C&W said on Saturday it would unveil plans on Monday to shift away from traditional telecom services towards the information technology services. But as of the market close, it had not provided details of the plan.

Among other telecom stocks, City Telecom Ltd gained HK$0.60 or 10.9 percent on speculation that the company would expand into mainland China Internet services.

The local international direct dial (IDD) and Internet Service Provider is joining Guangdong's Zhongshan University in a project to research China's Internet development.

Blue chip conglomerate Hutchison Whampoa Ltd ended down HK$1.50 or 1.4 percent and Johnson Electric fell HK$3.00 or 5.2 percent, surrendering more than half of its 9.5 percent gain on Friday to profit-taking.

"Buying and selling is pretty evenly matched, but the market's trying to find a base," said Michael Bugel, director of Hong Kong and China products at Jardine Fleming Securities.

"Clients are mixed on the market and they're not voting with their feet," he said.

Investors could get a clearer sense of direction in February, when the U.S. Federal Reserve's policy-setting Federal Open Market Committee decides on interest rates and Hong Kong banks start to report year-end results.-Reuters