HK stocks end week up; China records weekly gain

Written by Reuters
Friday, 12 February 2010 17:24

HONG KONG/SHANGHAI: Hong Kong shares ended marginally easier today, snapping three straight sessions of gains, as investors took profit ahead of the Lunar New Year holiday, while China stocks rose on optimism about the near-term trend as concerns over policy tightening eased, according to Reuters.

The benchmark Hang Seng Index ended down 0.11%, or 22 points, at 20,268.69. The index ended the week 3.07% up, its biggest weekly gain in percentage terms in the past 10 weeks. The China Enterprises Index of top locally listed mainland Chinese stocks was down 0.40% at 11,536.36.

"The market was trapped in a narrow band in directionless trade and very thin trade," said Patrick Yiu, a director at CASH Asset Management. "Despite a softer close, the underlying tone [of the market] was still positive. We remain optimistic that the market can edge up further."

Investors took to the sidelines ahead of details of a bail-out plan for debt-laden Greece and that sent HSBC, the most actively traded stock, down 0.74% to HK$80.75.

ICBC, China's largest lender, rose 1.1% to a week high at HK$5.66, before the stock trimmed gains and ended down 0.36% at HK$5.58.

Market turnover fell to HK$45.67 billion (RM20.11 billion), the lowest so far this year, from yesterday's HK$52.94 billion.

Commodities stocks eased as investors locked in gains after their recent strength fuelled by news about the support plan for Greece.

Shares of Sinopec fell 1.7% to a session low of HK$5.88 after a 2.2% rise the previous session, its biggest percentage gain since Dec 14. The stocks ended at HK$5.92, still down 1%.

PetroChina also closed 0.81% down after a 2% gain yessterday when the stock ended at its highest close in a week.

CITIC 1616 rose 4.3% to HK$2.40 its highest since Jan 15, after the telecommuncations service firm said it would buy a stake in Macau's mobile operator Companhia de Telecomunicacoes de Macau for HK$1.4 billion. The stocks ended up 3.9%.

Casino stocks outperformed the market with NagaCorp, which operates a casino in Cambodia, surging 3.5% to its highest close in more than a month, after it said it expected revenue in 2010 to grow by 30% with future growth to be driven by rising Chinese visitors.

Sands China, the Macau unit of Las Vegas Sands, climbed 3.97%.

China's key stock index closed up 1.09% on the day and recorded its first weekly gain in four weeks as investors grew cautiously optimistic about the near-term trend after the market returns from next week's week-long Lunar New Year holiday.

The Shanghai Composite Index ended at 3,018.133 points and rose 2.68% for the week.

GF Securities was by far the biggest gainer of the day, rising nearly five-fold to 50.05 yuan after achieving a "backdoor listing" by acquiring Yanbian Road Co, whose shares were suspended from trading since October 2006. The benchmark index gained 64% during that period.

"Some investors built light positions, hoping for a moderate market rebound after the holiday, although overall sentiment remained cautious," said a senior trader at a major Chinese stock brokerage in Shanghai.

China's latest economic data for January, posted by the government this week, showed that the country's economic recovery after the global financial crisis is now in full swing.

The data included a surprisingly low consumer price index for January, which has eased but not wiped out concerns about the possibility of an official interest rate hike in the near term.

But offsetting the positive news, which also includes improving corporate earnings driven by the recovering economy, is China's plan this year to gradually exit the economic stimulus programme in place since late 2008.

In its clearest statement so far on such an exit, China's central bank said yesterday that it would guide monetary measures away from an anti-crisis footing, even as it maintains an appropriately loose policy.

"The market will still be under pressure from shrinking money supply after the holiday, as regulators tighten liquidity and add new share supplies to curb possible asset bubbles," said Zhang Qi, senior analyst at Haitong Securities.

While gaining Shanghai A shares overwhelmed losers by 813 to 80, turnover was sluggish at 67 billion yuan (RM33.52 billion), up slightly from yesterday's 64 billion yuan as trade thinned in the run-up to the one-week holiday for the Lunar New Year, which begins on Feb 14.

Top steel producer Baoshan Iron and Steel Co, today's second most actively traded stock, closed up 2.43% at 8.02 yuan after it raised March prices for some of its products.

China State CONSTRUCTION [] Engineering Corp was the most actively traded share, but it closed unchanged at 4.28 yuan.

In Tokyo, Japan's Nikkei average rose 1.3%, with investors hunting bargains in exporters and other shares after a pledge by European leaders to support debt-laden Greece eased fears of a broader Eurozone crisis.

Mitsubishi Corp and other resource shares gained after metals rose on Chinese data showing banks had made stronger-than-forecast loans in January, while consumer inflation moderated more than expected in the year to January.

European leaders said yesterday they had struck a deal to help heavily indebted Greece, an unprecedented move to stave off a broader crisis in the 16-nation bloc that shares the euro single currency. But no details were announced.

"A series of negative factors such as concerns about Greece's problems and China's tightening policy are now priced in. But we still lack reasons to buy up the market further," said Masaru Hamasaki, a senior strategist at Toyota Asset Management.

"Worldwide economic measures, which have helped improve corporate earnings and the economy, are gradually coming to an end and there's a sense of uncertainty about what will happen after those programmes actually end."

Analysts also said that while recent risk aversion arising from concern about the fiscal stability of Greece, Portugal and Spain had eased enough to help all three Wall Street indexes rise more than 1%, there were still many uncertainties about the fiscal outlook for Europe.

"The pledge of support is basically just what you'd expect — European leaders can hardly say they'll just ignore Greece," said Kenichi Hirano, operating officer at Tachibana Securities.

"The really important thing is how they'll carry out this support, and that's something we don't know yet. Gains in Tokyo today are mainly due to bargain-hunting."

The benchmark Nikkei closed up 128.20 points at 10,092.19, its highest close in a week. On the week, it rose 0.3%.

The broader Topix gained 1 percent to 892.16.

Hirano said support for the Nikkei was solidifying around the level of its 200-day moving average just under 10,000 after the benchmark broke below that earlier this week.

Its next target is 10,160, where its 75-day average currently comes in, and then 10,275, where a gap was created on daily charts during the Nikkei's slide last week. Chart gaps can sometimes be targets to be filled in a correction.

Trading energy was also dampened by investor wariness ahead of next week's Lunar New Year holiday in China. — Reuters