HK stocks close higher, overshadowed by H-shares

July 21, 2000
Web posted at: 6:28 AM HKT (2228 GMT)

HONG KONG, (Reuters) -- China-related H-shares sprinted to an eight-month high on Thursday, distracting attention from Hong Kong blue chips, as investors were eager to get in on a China share revival sparked by news of a merger in the power sector on Tuesday.

The H-share index surged 8.23 percent to 521.20, extending a 3.95 percent gain on Wednesday.

The Hang Seng Index finished up 0.27 percent or 48.44 points at 17,758.51 lifted by the Cheung Kong group on reports that Deutsche Telekom AG had made a high bid for U.S. wireless telephone company VoiceStream Wireless Corp Cheung Kong's associate company Hutchison Whampoa owns 23 percent of VoiceStream.

"The market is waiting for more news," said Andrew To, sales director at Tai Fook Securities. "Major players are trying to stabilize the index at 17,500 to 18,000 as momentum is slowing but there's no bad news to push it down sharply."

Turnover totaled a reasonably healthy $1.76 billion (HK$13.733 billion) with advances outpacing declines by 356 to 292.

Trading focused on individual stocks, notably Hutchison Whampoa after Deutsche Telekom was reported to have made a $53 billion bid for VoiceStream. The German company declined comment on the media report, but if true it would value the U.S. company at well above the $35 billion price tag the industry had put on it, analysts said. They speculated that Japan's NTT DoCoMo could come in with a counter bid.

Hutchison rose 1.67 percent to $15.58 (HK$121.50), off a day's high of $15.77 (HK$123), and pulled its parent Cheung Kong (Holdings) Ltd up 2.86 percent to $12.70 (HK$99).

The two stocks helped lift a market that had opened weak because of the slide on Wall Street. Investors were also cautious ahead of U.S. Federal Reserve Chairman Alan Greenspan's testimony to Congress, traders said.

Banking and property stocks picked up later in the day but gains were modest.

The big winners were to be found among China shares, including recent listing China Unicom, which rebounded from recent profit taking on news of the mobile phone operator's $190 million deal with Motorola Inc. The U.S. telecom and semiconductor giant will expand Unicom's GSM 900 networks in three Chinese provinces.

"China Unicom is ready to roll with the big boys now," said Alan Chen, head of greater China sales trading at Nomura International.

China Unicom's stock jumped three percent to $2.64 (HK$20.60).

The biggest gainers were among H-shares amid expectations for merger activity among mainland companies and Beijing's plan to lift a ban on H-share companies issuing domestic A-shares, traders said.

Tsingtao Brewery Co Ltd surged 14.69 percent to $.21 (HK$1.64) after it said it is in talks to buy the Shanghai brewery of Danish brewer Carlsberg

Petrochemicals was, however, the preferred sector for H-share investors, replacing aviation which rallied on Wednesday.

Oil producer PetroChina surged to a record high of $.24 (HK$1.88) before easing to $.24 (HK$1.86), up 8.77 percent at the close.

"People think oil prices will still go up and with a price-earnings ratio of 11 times PetroChina is cheap compared to other international oil companies," said Alan Pau, associate director at South China Securities.

Investors also expect mergers in the Chinese petrochemical sector, traders said.

Huaneng Power International, which on Tuesday launched a takeover bid for New York-listed Shandong Huaneng Power Development Co, in what would be the first merger between overseas-listed mainland companies, jumped 3.15 percent to $.42 (HK$3.275), building on an 11.4 percent surge on Wednesday. Red chips were also starting to draw buying. The red chip index rose 3.78 percent to 1,374.49.

Less impressive was recruitment portal Panda-Recruit Ltd's debut on the Hong Kong Growth Enterprise Market

The stock dived from its $.036 (HK$0.280) IPO price to close at $.024 (HK$0.185), hit by a declining GEM market on the heels of a near three percent drop in the Nasdaq composite index, traders said.

The GEM index shed 2.64 percent to 451.47.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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