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Hong Kong shares close sharply lower as China telcos, banks take a hit - UPDATE
HONG KONG, Jan 07, 2009 (XFN-ASIA via COMTEX) --
Share prices closed sharply lower on further
profit-taking in China telecom firms, as Beijing issued long-awaited 3G
licenses, and a sell-off of mainland lenders after Bank of America cut its stake
in China Construction Bank (CCB).
China Mobile and China Telecom slumped over 5 pct and China Unicom tumbled over
10 pct even as they won licenses for next-generation mobile phone services. The
stocks had surged previously on the 3G lead.
CCB fell over 8.7 pct after news that Bank of America sold 5.62 bln shares of
the mainland lender at 12 pct discount to the stock's previous closing price.
Semiconductor Manufacturing International Corp (SMIC) was up nearly 3 pct after
a report that China's top contract chip maker plans to sell a strategic stake to
Intel Corp.
The Hang Seng index closed down 522.05 points or 3.37 pct at 14,987.46, after
moving between 14,976.74 and 15,763.55.
Turnover increased sharply to 90.02 bln hkd.
"What we've seen today is no more than short-term profit-taking after recent
gains and should not cause any undue alarm," said Eric Yuen, head of research at
Dao Heng Securities.
"Global markets have had a decent run since the start of the year largely
because investors' expectations had been raised by (incoming US President)
Barack Obama's proposed economic stimulus plan," he said.
Obama, who assumes office on January 20, is pushing for the adoption of a
massive stimulus package worth some 775 bln usd, including aggressive tax cuts.
Yuen said there was nothing irregular in the strong selling pressure seen in
China telecom firms.
"Those counters had gained a lot before today's announcement on the issue of 3G
licenses. It's perfectly understandable to sell on the news," he said.
China officially granted today third-generation (3G) mobile telephony licenses
to China Mobile, China Unicom and China Telecom.
China Mobile, the country's largest wireless operator, received a license to
offer 3G services based on China's home-grown TD-SCDMA platform.
China Unicom's system will run on WCDMA technology and China Telecom's on
CDMA2000. Both technologies are already in wide use in Europe and North America.
China Mobile today announced the official launch of its TD-SCDMA services
following an eight-month commercial trial.
Yuen said he does not see any fundamental change in the relatively positive
sentiment in the market despite today's sharp correction.
"I expect to see our market making more gains later this month because the
overall backdrop is positive," he said.
He said the spike in turnover today is a reflection of improving investor
interest in the market.
China telecom firms saw a second day of profit-taking even as Beijing issued 3G
licenses.
China Mobile slumped 4.55 hkd or 5.48 pct to 78.45, China Telecom lost 0.16 hkd
or 5.02 pct at 3.03 and China Unicom fell 1.09 hkd or 10.6 pct to 9.19.
The stocks had posted strong gains in the first two sessions of 2009 after
China's cabinet gave the go-ahead for issue of the 3G licenses.
CCB closed down 0.39 hkd or 8.76 pct at 4.06, off a low of 4.05, after news
that Bank of America sold 5.62 bln H-shares of the Chinese lender at 3.92 hkd
per share.
Yuen said BOA's sale of CCB shares has raised fears that other China banks,
notably Bank of China (BOC) and ICBC, may also be subject to a selldown by
strategic investors.
"ICBC and BOC still have certain foreign strategic investors, some of whom
might do what BOA has done. Investors also worry about sharp contraction in
fourth quarter earnings of mainland lenders," he said.
Bank of China slipped 0.07 hkd or 3.17 pct to 2.14, ICBC lost 0.31 hkd or 7.26
pct at 3.96, China Merchants Bank shed 0.96 hkd or 6.11 pct at 14.74 and Bank of
Communications was down 0.28 hkd or 4.52 pct at 5.92.
Property developers ended mixed after strong gains in the morning on hopes that
local banks will follow a CCB unit's lead in cutting mortgage loan rates.
China Construction Bank (Asia) Ltd cut its mortgage rates for new homebuyers by
25 basis points to 3.25 to 3.50 pct.
Henderson Land gained 0.70 hkd or 2.17 pct at 32.90 and Wharf Holdings rose
0.25 hkd or 1.13 pct to 22.45, while Sun Hung Kai dropped 0.25 hkd or 0.34 pct
to 73, Sino Land was down 0.12 hkd or 1.3 pct at 9.10 and Cheung Kong fell 2.75
hkd or 3.37 pct to 78.75.
Henderson Land's gains came amid hopes it will generate good sales from new
residential projects in Kowloon that are being launched this week.
HKEx was down 1.15 hkd or 1.35 pct at 83.85 after gaining earlier this week on
a pick-up in market activity.
Among other blue chips, HSBC was down 1.95 hkd or 2.53 pct at 75.0, China Life
lost 1.10 hkd or 4.31 pct at 24.45 and Hutchison Whampoa was down 0.50 hkd or
1.12 pct at 44.10.
Oil firms were down, with CNOOC losing 0.30 hkd or 3.66 pct at 7.90, PetroChina
down 0.37 hkd or 4.73 pct at 7.45 and China Petroleum & Chemical (Sinopec)
losing 0.19 hkd or 3.65 pct at 5.02.
Oil producers posted strong gains in recent sessions as crude oil prices rose
due to Israel's military offensive in Gaza.
SMIC was up 0.01 hkd or 2.9 pct at 0.355, off a high of 0.385, after a report
that the chip maker plans to sell some stake to Intel Corp.
Fubon Bank (Hong Kong) was down 0.12 hkd or 4.92 pct at 2.32 on news that it
has set aside provisions for up to 100 mln hkd of loans that are being
investigated after suspected fraud by some bank officials in Hong Kong.
Shanghai Electric Group plunged 0.45 hkd or 13.16 pct to 2.97 after it lowered
its earnings projection. The company cut its forecast for 2008 earnings by 10-13
pct from an earlier estimate of 2.97 bln, saying several customers requested
delivery deferrals.
Parkson Retail Group dived 1.42 hkd or 15.81 pct to 7.56 after the department
store operator said it may record lower year-on-year same store sales growth, of
7-8 pct, for the fourth quarter of 2008.
Lenovo was suspended from trading pending pending an announcement. The Chinese
personal-computer maker is expected to unveil a restructuring plan. The stock
had surged 17.8 pct over the previous two days.
The Hang Seng China Enterprises index ended down 399.83 points or 4.63 pct at
8,244.68.
(1 usd = 7.8 hkd)
jun.concepcion@xfn.com
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