Share placements spark a wave of heavy selling
Investors sold off Hong Kong equities yesterday following share placements from Bank of China Hong Kong and Oriental Press Group on Monday, prompting fears stocks might have peaked.
The Hang Seng Index opened 100 points lower, but losses were exaggerated later in the session by speculation that China Mobile and Chalco could also place shares in the near term.
The blue-chip index ended down 2.07 per cent, or 259.84 points, at 12,260.33. Turnover, however, was enormous at $34.47 billion - the highest since the February 2000 dotcom frenzy. BOCHK accounted for $19.61 billion.
Market watchers said investors were using the share placements as an excuse to take profits.
'I'm not surprised to see a retreat. In fact, it's about time investors locked in profits. Investors usually find it more appealing to hold cash before the holidays,' said Vincent Koo, chief investment officer at Kingsway Fund Management.
'Looking ahead, I'm rather bullish on the first quarter next year, particularly banking stocks which will announce their results in January, when loan improvements will be reflected,' he said.
Yet, BOCHK was the biggest loser among the Hang Seng constituents yesterday. Selling pressure was heavy, led by institutional investors, after the bank's parent cashed in $14.65 billion by placing 1.07 billion existing shares at $13.70 each on Monday.
The counter was well supported above the placement price thanks to keen interest from retail investors. BOCHK ended 10.25 per cent lower at $14.
However, investors in Oriental Press had already digested the placement news. It fell only 0.93 per cent to $2.65 after losing 5.93 per cent on Monday.
China Mobile rose to an intraday high of $23.75 in the morning on news it would acquire its parent's remaining mobile phone assets in 10 mainland provinces. It finished at $23.05, or 1.07 per cent, lower, on speculation the company would place shares - which it denied.
Another victim of share placement fears was Aluminum Corp of China (Chalco), which fell 8.18 per cent to $5.05. Still, the stock is up 346.9 per cent so far this year.
Market watchers had long suspected the company would need to raise money to expand production, a fund manager said.
However, another fund manager said Chalco had no urgent need of cash.
Property stocks also succumbed to profit taking. The properties sub-index fell 2.46 per cent, or 367.45 points, to 14,554.26 after gaining about 680 points last week.
Wharf fell 5.69 per cent to $20.70, Sun Hung Kai Properties dropped 2.66 per cent to $64 and Cheung Kong was 2.41 per cent lower at $60.50.
Mainland travel-related stocks bucked the trend on expectations of higher demand for travel services during the holiday season. Travelsky Technology, an air-ticketing service provider, gained 3.37 per cent to $9.20.
Mainland airlines also gained after they were allowed to increase domestic airfares amid higher fuel costs. China Southern Airlines jumped 4.68 per cent to $3.35 and China Eastern Airlines rose 1.49 per cent to $1.36.
KEY FIGURES
Close: 12,260.33 (-259.84)
Turnover: $34.47 bln
Volume: 14.41 bln sharess
Day's high: 12,456.01
Day's low: 12,166.98
Advanced: 264
Declined: 725
Unchanged: 459
December futures: 12,238 (-302)
January futures: 12,235 (-308)
