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HK stocks end modestly higher on laggards, techs

HONG KONG: Hong Kong stocks ended modestly higher on Friday, led by blue chip laggards and high-techs, as investors took profit in high-flying heavyweights ahead of an expected interest rate hike later in the day.

The benchmark Hang Seng Index, which dipped into negative territory in the morning, ended Friday up 0.42 percent or 73.99 points at 17,784.57 to complete a four percent gain for the week.

Turnover was a light HK$14.3 billion, much less than February's daily average of HK$22.1 billion. and Cable & Wireless won a tug-of-war with three market leaders China Telecom (Hong Kong) Ltd, Hutchison Whampoa Ltd and parent Cheung Kong (Holdings) Ltd as investors took profit on the Cheung Kong group after their stellar earnings reports.

"With Hutchison and Cheung Kong it's buy on rumour and sell on fact, but what are you going to buy?" said Alan Chen, sales trader at Nomura Securities.

"You have got to buy PCCW (Pacific Century CyberWorks) and the big bank (HSBC) as they haven't carried favour for some time."

While Hutchison was in negative territory for much of the day, it ended Friday unchanged from on Thursday's close of HK$145.00, but Cheung Kong lost 1.7 percent or HK$2.00 to HK$114.00.

"Both stocks are now at pretty high valuations," said Robert Rountree, head of research at Prudential-Bache Securities. "Certainly people want to see evidence that their telecom and growth side are progressing further."

China Telecom, which has surged 78 percent in the last three months, ended the day down 2.34 percent or HK$1.75 at HK$73.00. Recently out-of-favour tech stocks and banks made up for the falling market leaders, buoyed by optimism that the global correction in technology stocks may be near an end and that some of the concern about interest rates was out of the way.

After the market closed the Hong Kong Association of Banks raised its deposit rate a quarter point as expected to 4.25 percent, with major local banks following suit by raising their prime rates.

HSBC and Hang Seng Bank, both left behind this year as investors raced into high-techs, raced up ahead of the news.

"Banks have held back for an awfully long time in Asia as in the States as people worried about interest rates and the 'old economy'," said Rountree. "The market has more than discounted the gloomy outlook."

Which has lost 14 percent in the past three months, leapt 2.5 percent or HK$2.25 to HK$92.00.

Hang Seng Bank jumped 1.9 percent or HK$1.25 to HK$68.25.Internet start-up led the high-tech group up, surging 7.2 percent or HK$1.35 to HK$20.15.

"PCCW was sold off quite aggressively so it's just a rebound from that," said Rountree. "A lot of people who have wanted to lock in profits have already done so."

PCCW chairman Richard Li said on Friday he was confident about his company's merger with C&W HKT. C&W HKT's board meets on March 28 to consider PCCW's US$35.9 billion bid.

Which now moves in tandem with jumped 3.3 percent or HK$0.70 to HK$21.65.

Hong Kong's high-tech GEM index followed its US counterpart up, surging 5.20 percent to close above its base level of 1,000 for the first time since the index started this week.

Rountree said it may be difficult for the market to move ahead next week, but if US technology companies show good results, they could drive up regional tech-related counters.

A total of 496 issues rose while 222 fell.-Reuters