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Hong Kong stocks end lower, hit by Nasdaq

HONG KONG: Hong Kong's blue chip stocks fell on Wednesday for a third day to their lowest level in three weeks after disappointing earnings by telecom company SmarTone Telecommunications compounded a sharp drop on the Nasdaq.

The benchmark Hang Seng Index tumbled 1.07 percent or 181.96 points to close at 16,747.20 after dropping over two percent following the open after the Nasdaq suffered its second largest point drop.

But in a day of mixed performances, the Hang Seng Utilities index rose 1.91 percent and red chips jumped 2.61 percent as investors sought refuge in laggard stocks.

"The market is still very unstable as expected after Nasdaq," said Jason Ho, director of sales at BNP Prime Peregrine Securities.

However analysts said the slide could have been steeper considering the extent of Nasdaq's drop.

"The market could have been hit harder, but there is still energy in the Hong Kong market," said Peter Redhead, head of Hong Kong research securities at Jardine Fleming.

"Investors are looking at both sides of equations, new and old economy stocks, and buying the best in both sectors."

SmarTone dragged down other telecom companies after Hong Kong's No. 3 mobile operator posted a worse-than-expected interim net loss of HK$393 million due to a HK$488 million writeoff.

SmarTone, which has been on a rollercoaster ride since late last year, slumped 5.5 percent or HK$1.70 to HK$29.30.

"The telecom frenzy appears to be cooling down a bit," said Herbert Lau, associate director of research at Celestial Asia Securities.

"The share prices of telcos have shot up quite a bit over last the few months so there's been a bit of profit-taking."

Hong Kong's dominant telephone company, Cable & Wireless which was hoisted in recent weeks by a bidding war, lost 2.2 percent or HK$0.50 to HK$22.20.

The losses spread to China Telecom (Hong Kong) Ltd, which slumped 2.2 percent or HK$1.50 to HK$66.25 and accounted for almost half of the Hang Seng's fall, according to Reuters 3000.

Telecom-related conglomerate Hutchison Whampoa Ltd lost 1.8 percent or HK$2.50 to HK$135.00.

Sun Hung Kai Properties, which has a stake in SmarTone, also weighed on the index. The developer has seen volatile trading ahead of the initial public offering of its Internet arm, Sunevision Holdings Ltd, on Friday.

Sun Hung Kai Properties, which is seen posting a 10 percent rise in first half earnings on Thursday due to better sales and lower interest expense, fell 2.7 percent or HK$2.00 to HK$71.00.

Dealing in the shares of mobile phone operator SUNDAY Communications Ltd, which is expected to start in Hong Kong on Thursday, may be affected by Wednesday's telecom sell-off, an analyst said.-Reuters