HSI loses key support level

PUBLISHED : Wednesday, 10 May, 2000, 12:00am
UPDATED : Wednesday, 10 May, 2000, 12:00am

Hong Kong stocks floundered yesterday after Monday's dive on the Nasdaq Stock Market, with interest rate jitters keeping a lid on bargain hunting seen in the afternoon.

The Hang Seng Index dropped 0.83 per cent to end 124.1 points weaker at 14,776.9. Turnover was a thin HK$6.51 billion.

The market fell to a low of 14,644.61 in early trading before paring losses in the last hour.

Analysts said a break through the technically important 14,800-point level left little hope for a significant rebound this week.

Investors were hesitant before the Federal Open Market Committee's meeting next week and a lack of local corporate news kept buyers on the sidelines, they said.

'There is so much uncertainty. Nasdaq is proving to be very unpredictable and moving in a very volatile way,' Pacific Challenge Securities head of research Alan Hutcheson said.

On Monday, the Nasdaq Composite Index dived 3.86 per cent, while the Dow Jones Industrial Average edged up 0.24 per cent.

'[The Hang Seng Index] tried to hold on to the key level of 14,800 but I think interest rates were the excuse . . . and the US markets,' Daiwa Securities vice-president of Asian equity Michael Liang said.

Blue-chip property counters suffered the most, with Cheung Kong sliding 3.3 per cent to $80.50 and Wharf tumbling 4.06 per cent to $14.15. The property sub-index closed 2.22 per cent weaker.

'Property was still under pressure as that will be the most affected by a rise in interest rates,' Mr Hutcheson said.

In the broader market, there were some steady gainers among select middle-tier counters involved in the new economy. Asia Satellite Telecommunications soared 9.26 per cent to $24.05, while CCT Telecom jumped 9.37 per cent to $2.10 and SmarTone Telecommunications gained 2.58 per cent to $25.80.

On Monday, CCT Telecom announced it had formed a non-exclusive strategic alliance with Lucent Technologies to provide integrated networking solutions in the mainland.

On the Growth Enterprise Market, Tom.com rose 2.22 per cent to $6.90 and Hongkong.com leapt 4.6 per cent to $1.59.

The GEM index inched 0.38 per cent higher to 626.32 points.

Brokers attributed the select gains in the smaller plays to retail punters picking up last-minute bargains.

'On the GEM, there was some retail bargain hunting. If you look at Hongkong.com, it crashed on Monday . . . so don't read too much into the gains,' Mr Liang said.

However, minor upside in the second tier did little to enthuse market sources, who said today's trade could be weaker ahead of a public holiday tomorrow.

'I think we have a battle around 14,800,' one dealer said. 'That's the key support level and it tried to hold on to that.' Investors were also cautious ahead of US producer price index data due Friday, another indicator of how severe the Fed's rate rise could be next week.