Handover blues hurt HK stocks, MSCI says

PUBLISHED : Friday, 04 April, 1997, 12:00am
UPDATED : Friday, 04 April, 1997, 12:00am

Concern over the handover helped to make Hong Kong equities the second-worst performers among developed markets this year, Morgan Stanley Capital International (MSCI) says.

In US dollar terms, the territory's market slipped 9.5 per cent in the first quarter, compared with a 0.1 per cent global drop and a 4.4 per cent gain in Europe.

MSCI also attributed Hong Kong's dismal showing to jitters over US interest rates, especially in the property sector, and to investors chasing red-chip counters at the expense of most Hang Seng Index constituents.

'[In March] Hong Kong continued to suffer from concerns over US-driven interest rates adversely affecting the local property market, the impending takeover by China and the diversion of investor attention away from blue chips to red chips,' MSCI said.

The majority of brokers and analysts in the territory have not identified handover-related anxieties as a cause of the market's recent downturn.

Among developed markets, only Japan fared worse, falling 12 per cent in the quarter.

Germany turned in the best performance, with its equities rising 11 per cent.

In the region, Thailand propped up the emerging markets table, with a 15.2 per cent decline.

Malaysia and Singapore - classed as developed markets - dipped 0.1 per cent and 7 per cent respectively.

Taiwan was the region's star performer, adding 9.5 per cent, while India also grew strongly, rising 7.1 per cent over the quarter despite a poor showing last month.

Emerging markets in Latin America and Europe showed blistering gains.

Russia soared 50.4 per cent, although like India it lost ground last month.

Turkey leapt 47.4 per cent and Greece grew 32.5 per cent.

Colombia and Brazil both expanded more than 20 per cent.