20000330

HK stocks close sharply higher on Dow, merger lift

HONG KONG: Hong Kong stocks closed sharply higher on Tuesday, rebounding on the back of the Dow's overnight gains, telecoms merger euphoria and better-than-expected prices in a government land auction.

But brokers warned that traded volumes had dropped off and the terms of the PCCW-C&W HKT merger deal also would have a big impact on the market on Wednesday.

The Hang Seng Index closed 185.00 points or 1.09 percent higher at 17,169.44 after leaping to a high of 17,290.07 early in the afternoon session.

Turnover was HK$12.97 billion, down from Monday's HK$14.93 billion and about half the level of one week ago.

Overnight the Dow Industrials closed 176.53 points or 1.79 percent higher at 10,038.65.

Brokers said the terms of the merger deal between fledgling Internet and media services provider Pacific Century CyberWorks and telecoms giant Cable and Wireless would have a big impact on the market.

"We need the details. Without them we can't estimate the price of HKT," said analyst Steven Chu at Sassoon Securities.

After the market closed, London sources revealed that Pacific Century CyberWorks had offered US$38 billion in shares or $35.9 billion in cash and shares for C&W HKT.

The all share offer comprises 1.1 PCCW share per share, while the cash and share mix is HK$7.23 and shares per share, the source said, adding the deal was the biggest ever takeover in Asia.

Will in addition pay its shareholders a special dividend amounting to $700 million before the deal is completed.

PCCW and C&W HKT have been suspended from trading and are expected to resume trading on Wednesday.

Utilities led the blue chips higher, followed at a distance by the commercial and industrial sector.

CLP jumped HK$1.60 or 4.88 percent to close at HK$34.40 but on light turnover of HK$159.7 million.

Hutchison Whampoa climbed HK$2.50 or 2.09 percent to HK$122.00 on heavy trade of HK$565.71 million.

The property sub-index posted a modest gain on the back of Cheung Kong's advance, up 3.5 percent at HK$103.50 at the close. But blue chip Sun Hung Kai Properties tumbled HK$1.75 or 2.43 percent to HK$70.25.

This was despite generally better-than-expected results from the sale of three residential properties in a government land auction on Wednesday afternoon.

"The site in Severn Road (Victoria Peak) is a very difficult site. The price reflected this. It is a very good price, indeed," said C.K. Chan, director of Lanbase Surveyors Ltd.

HSI Services Ltd, compiler of Hong Kong's blue chip Hang Seng Index said on Tuesday it would launch a Hang Seng Technology Index. A formal announcement and further details would be made in April.-Reuters