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HK's HSI edges to record close on futures expiry

HONG KONG: Hong Kong's Hang Seng Index edged to a second straight record close on Tuesday in a see-saw session as investors sought out market heavyweights to prop up the index ahead of Thursday's index futures expiry.

After hovering in and out of positive territory all day, the Hang Seng Index closed at 18,301.69, up 0.05 percent or 8.83 points from Monday's record close. It touched an intra-day record of 18,397.57 in the afternoon before pulling back.

But in the broader market, declines buried advances 463 issues to 246 and turnover fell to HK$11.9 billion from HK$15.5 billion on Monday. Tuesday's turnvoer also was just over half the February daily average of HK$22.1 billion.

Trading was again being driven by the futures expiry, with many investors holding long positions and pushing up key stocks to make sure the index futures expire at a high level, traders said.

"The bulls believe if you hold the market up, eventually people will be forced to cover (their shorts)," said James So, director of research at Asia Financial Securities. "That's been happening yesterday and today."

March Hang Seng Index futures: ended down 10 points at 18,380, on volume of 18,500 contracts. April index futures shed 30 points to 18,400 on volume of 10,000 contracts.

Fund managers were also trying to "window-dress" their portfolio ahead of the fiscal quarter, and were likely to increase their holdings in stocks because the market is at an all-time high, analysts added.

"You'd have a tough time saying to your client that you're holding 30 percent of your funds in cash when the market is so high," said So. Hong Kong conglomerates Hutchison Whampoa Ltd and CITIC Pacific held the market from further losses, after investors were cheered by Monday's announcements of ventures with US tech behemoths.

Cash-rich Hutchison and its parent Cheung Kong (Holdings) Ltd resumed their rise of recent days after Hutchison's port subsidiary said it was forming a US$100 million e-commerce joint venture with US software giant Oracle Corp.

Hutchison rose HK$1.00 to HK$150.00 while Cheung Kong jumped HK$3.00 to HK$119.00.

Blue chip CITIC Pacific Ltd surged 4.4 percent or HK$2.00 to HK$47.50 after touching a year high of HK$48.40.

On Monday the China-backed conglomerate agreed to buy more than US$80 million worth of equipment from US giant Lucent Technologies for its Chinese backbone telecommunications network.

China Telecom (Hong Kong) Ltd which is often used by traders to move the index because of its heavy weighting, added 0.7 percent or HK$0.50 to HK$76.50. After hitting a high of HK$13.00, Guoco Land Ltd ended up 38.8 percent at HK$9.30 on news of a that will transform the company into a venture capital firm focusing on Asia's mobile Internet industry. It will be controlled by Sweden's Investor AB.

But the strength in a select number of behemoths was barely able to hold off losses in other blue chips which had helped lead the surge to records on Monday, brokers said.

"There's some consolidation after yesterday's 500-point gain as investors go bargain hunting," said Andrew To, sales director and head of research at Tai Fook Securities.

Among blue chips, interest rate-sensitive banks suffered the most, with the Hang Seng financial index tumbling 1.48 percent, following Wall Street down on concern the Federal Reserve will need to hike US rates more aggressively.

Hong Kong's largest bank, HSBC Holdings Plc lost almost half of Monday's gains, tumbling 1.6 percent to HK$93.00.

Hong Kong's largest telecom carrier, Cable & Wireless lost almost all of Monday's gains, falling 2.5 percent or HK$0.55 to HK$21.75.

C&W HKT's board was scheduled to meet on Tuesday to review the US$35.9 billion bid by Internet upstart Pacific Century CyberWorks Ltd and analysts expect the deal to completed.

Hong Kong's high-tech GEM index skidded 2.05 percent to end below its 1,000 base level, as investors followed their Japanese counterparts in selling off high-flying Internet and technology concept stocks.-Reuters