HSI clings to yen's coat-tails
Hong Kong shares moved in step with a dramatically fluctuating yen to close slightly higher yesterday, while select blue chips rose as much as 10 per cent on bargain hunting, brokers said.
The Hang Seng Index advanced 63.95 points, or 0.85 per cent, to 7,526.45, after climbing to 7,642.66 in morning trade.
'It looks like the Hong Kong market is now pegged to movements of the yen,' BNP Prime Peregrine sales director Allen Chang said.
'There was some excitement at mid-morning when the yen came back strongly, but then when the yen weakened so did we.' The gains pared some of Monday's 5.72 per cent loss as the market was unsettled by the yen's sharp falls, which sent local interbank rates soaring.
So hitched was the market to the fate of the yen - which saw up-and-down trade from more than 146 yen to the US dollar to the 142 level in just a few hours - that it shrugged off Wall Street's 2.34 per cent loss on Monday.
Brokers said the market was also supported by value-hunters.
Blue-chip conglomerates Swire Pacific and Citic Pacific rose 10.58 per cent and 9.01 per cent respectively.
The commerce and industry sub-index outperformed the market with a 4.06 per cent jump.
There was no respite for mainland-related stocks, as the H-share index shed 3.07 per cent and the red-chip index nudged down 0.23 per cent.
Their declines came despite favourable economic statistics released in the mainland yesterday, ING Barings economist Kevin Chan said, pointing to the 12.7 per cent growth in fixed-asset investment in the first five months of the year.
'This shows a pick-up in the past few months,' he said.
'It's the best indicator of [China's] pledge to increase infrastructure spending.
Otherwise, he said, the mainland stocks had been underperforming on fears of a devaluation and slowing economic growth.
Some of the sell-offs rang of panic, analysts said.
'Everyone's asking why Qingling Motors is getting sold off,' one said. 'Most of its parts are sourced in Japan, if the yen's falling, it should benefit.' Qingling has fallen 31.13 per cent to $1.98, since the yen breached 140 against the US dollar on June 8.
The analyst speculated its yankee convertible bond was scaring off investors, as many China stocks with US dollar debt are being sold off on fears the yuan may soon be weakened.
'If you don't believe in the devaluation, it's just amazing the value in some of these stocks,' he said.
New World Infrastructure (NWI) plummeted 16.47 per cent yesterday to $7.35 on fears that Pacific Port shareholders will take NWI up on its mandatory general offer of $1.15 per share now that the container terminal operator's stock price has fallen below that level.
That could mean a further outlay of several hundred million dollars for the acquisition, but some analysts said the reaction was overdone.
KEY FIGURES Close: 7,526.45 (+ 63.95) Turnover: $7.57 bln Volume: 2.7 bln shares Day's high: 7,642.66 Day's low: 7,351.68 Advanced: 155 Declined: 361 Unchanged: 496 June futures: 7,470 (+ 110) July futures: 7,530 (+ 125)