Technology and property sectors take heart from Wall Street rally
Hong Kong investors warmed to the technology and property sectors yesterday after calming signals from Wall Street.
The Hang Seng Index closed up 1.35 per cent at 15,295.42 points although turnover was a lower HK$7.77 billion.
'The market picked up from the Nasdaq [Composite Index] and a stabilised United States market. We saw positive signs that the US market is disregarding some of the bad news,' Tanrich Asset Management director Kennis Leung said.
The Nasdaq climbed 4.61 per cent on Thursday, to 2,640.57 points, despite discouraging news from technology giants Yahoo! and Cisco Systems chief executive John Chambers. Although the technology-heavy index gained for three consecutive days, analysts said Thursday's after-hours earnings warnings from Hewlett-Packard and Gateway would test the sector's bullish resolve.
Pacific Challenge Securities research director Ricky Tam Sing-hing doubted whether the technology rally could be sustained.
'I wonder if it can last. I think the technology rally might last for a few weeks but that is it. A lot of technology companies will be announcing results in the next two months and a lot of those results will be poor,' he said.
Selective Hong Kong technology companies were suitably encouraged to stage some impressive gains.
Consumer electronics manufacturer VTech was up 11.81 per cent, for a $6.15 close, while liquid crystal display maker Varitronix soared 15.9 per cent to settle at $7.65.
Johnson Electric and Li & Fung, two stocks whose involvement in the US market has seen them beaten down in recent weeks, also took an upward move yesterday. Li & Fung ended 5.77 per cent stronger at $14.65, while Johnson added 7.31 per cent to finish at $11.
Phillip Securities head of research Louis Wong said these stocks' near-term direction was inextricably linked with the Nasdaq's fortunes.
'These stocks have been over-sold but the Nasdaq is the reason for their rally. If the Nasdaq manages to test the 2,700-point resistance level, the first group of movers will be the better-managed technology stocks,' Mr Wong said.
The property sector bounced back from Thursday's 3.11 per cent slip as a spate of fund-raising activities drew to a close but was still cooling market sentiment. The properties sub-index climbed 3.5 per cent yesterday, helped by a 7.14 per cent climb in Wharf to $21 and Sino Land's 8.12 per cent surge to $4.325.
E2-Capital Securities head of equities trading Dale Tsang said reports of a death in the property rally were exaggerated.
'A lot of people who bought properties, especially the foreign funds which repositioned themselves, are not going to sell just because of one drop,' he said.
Mr Wong saw no reason to be positive about the broader market.
'Market turnover is dwindling. We expect the trading range to narrow and then the market will quieten further,' he said.
Close:15,295.42 (+ 204.65)
Volume:5.32 bln shares
January futures:15,360 (+ 285)
February futures:15,404 (+ 265)