Blue chips check slide
BLUE chips jumped sharply the moment the market opened yesterday while smaller speculative stocks associated with mainland entities plunged, many by 20 per cent or more.
With British Foreign Minister Douglas Hurd heading for Beijing and several remarks by Governor Chris Patten on the so-called through train to digest, some political watchers thought a British political climbdown was on the way and bought into major stocks.
After 15 minutes of trade the Hang Seng Index had smashed through the 7,300-point barrier and was on the way to 7,350, compared with Friday's close of 7,217.93, although prices then started to slide.
Those with their eyes on Beijing, however, saw dark clouds as Vice-Premier Zhu Rongji's moves to control the runaway mainland economy became clearer.
The repatriation of the large capital balances built up in Hongkong and the end to some of the grander empire-building exercise on the Hongkong stock exchange were all firmly on investors' minds.
''It's quite clear that people have been tipping out of the more speculative issues and into blue chips,'' said Nial Gooding, sales manager at Barclays de Zoete Wedd.
''There was a little of buying and a little bit of switching, but as the day went on it turned into selling.'' Many of these smaller stocks had fallen sharply over the past few trading days, but for many, yesterday's falls were the most savage yet. Ten stocks fell by more than 20 per cent, and Lolliman collapsed 34.7 per cent to end 60 cents down at $1.13.
Lolliman was recently taken into the control of Continental Mariner, which is in turn under the control of CITIC Development.
Tung Wing Steel, one of the first of the recent shell listings by Shougang Corp, added to last week's 19.1 per cent loss with a further 13.3 per cent fall of 85 cents to $5.50.
Santai Manufacturing, last week's worst performing share with a fall of 25.4 per cent, fell a further 21.4 per cent or 92.5 cents to $3.40.
''Most of these shares are off 30, 40, even 50 per cent in the last two days,'' said Michael Ng Wai-ming, assistant general manager at Sassoon Securities.
He said investors feared that mainland enterprises in Hongkong would have to repatriate capital to support the yuan.
Among major stocks, the sharp rise followed by a slide was a rerun of the trading in London on Friday, which could react immediately to news of Mr Hurd's visit which was announced on Friday morning (London time).
After profit-taking ended the steep rise, prices fell sharply throughout the day on a stream of bad news.
This included the afternoon announcement from British ambassador Sir Robin McLaren, after the first day of the seventh round of Sino-British talks, that ''there's still quite a lot of work to be done, that's quite clear''.
The poor verdicts on the flotation of Shanghai Petrochemical and the sliding price of Tsingtao Brewery on the grey market added to the gloom.
By 11 am, the index had fallen back through 7,300, and by lunch had dropped to 7,278.25. The slide sped up after Sir Robin's remarks, only halted by the end of the day's trade after falling 50 points in 40 minutes.
The index closed down 12.52 points at 7,205.41. The estimated volume was $4.06 billion.
The July index futures closed 33 points above this at 7,238.
HSBC had the day's highest trade, with a turnover of $199.21 million, the price beating the market slightly by rising 50 cents to $75. Finance stocks in general held firm.
Half of the 33 index stocks were unchanged or down a spread.
New World, which has a land bank of 25 million sq ft in China, slid 2.5 per cent or 50 cents to $19.60. CITIC Pacific fell 1.7 per cent or 30 cents to $16.90.
Manhattan Card, which made its debut on Friday, saw the day's second highest turnover of $136.43 million, although the price started to stabilise at $2.625, a rise of five cents on the day.
TVB strengthened 30 cents to $20.20 on hopes that Rupert Murdoch would succeed in his plans to take a stake.
Miramar Hotel added 10 cents to $16.10 in advance of a board meeting expected tomorrow.
