Caution over recent rally stalls buying momentum
Hong Kong stocks moved slightly higher yesterday, but the strong buying momentum from the previous session was all but gone as investors looked ahead to a speech by Federal Reserve chairman Alan Greenspan later in the day.
A certain amount of funds were also redirected to the slew of upcoming new listings, although indications that they were attracting good demand also gave support to the secondary market, dealers said.
'Investors are a bit cautious about the recent rally as we have gone up quite a lot and European markets were mixed,' said an equity salesman at a local brokerage.
Mr Greenspan's two speaking engagements this week - late yesterday and tomorrow - will be scrutinised for early tips on what the central bank may say and do after its next policy meeting at the end of the month.
'There is no need to rush to buy stocks right now,' said Herbert Lau Chung-kwan, head of research with Celestial Asia Securities. 'But with oil prices coming down and a growing belief that interest rates should still be bearable even if they go up a bit, sentiment is definitely improving,' he added.
The Hang Seng Index edged up a modest 17.31 points or 0.14 per cent to 12,344.16 following a 2.53 per cent jump the previous day. The H-share index gained 0.2 per cent to 4,312.6, having rallied 5.27 per cent on Monday.
Micro-motor maker Johnson Electric was the top blue-chip gainer, rising 4.05 per cent to $7.70. It reported weak full-year earnings due to rising material prices on Monday, but the market focused on management saying it expects double-digit sales growth next year.
HSBC finally ran out of steam and finished unchanged at $118.50.
Property counters were mixed as some investors bought ahead of a second government land auction next week, while others took profits on reports of slowing home sales.
Carmakers were also out of favour and instead investors switched into petrochemical stocks and lagging telecoms counters.
An unconfirmed newspaper report that mainland car buyers had defaulted on almost 100 billion yuan worth of car loans last year was partly blamed for the selling, although analysts doubted whether the number was accurate.
Coming as it did on the heels of slowing sales numbers for the past two months, vehicle stocks were an easy target, however, and Denway Motors fell 6.61 per cent to $3.175, while Brilliance China gave up 3.63 per cent to $2.65.
Meanwhile, China Unicom rose 1.69 per cent to $6 after a 6.3 per cent gain on Monday and China Telecom added 2 per cent to $2.55.
Sinopec Zhenhai Refining and Chemical rose 9.77 per cent to $7.30 and the other three petrochemical stocks in the H-share index were up between 1.4 and 2.1 per cent as crude oil prices drifted lower in Asian trading hours. After the market closed the oil price again broke above US$39.
Key figures
Close: 12,344.16 (+17.31)
Turnover: $13.55 bln
Volume: 14.51 bln shares
Day's high: 12,463.26
Day's low: 12,319.92
Advanced: 510
Declined: 499
Unchanged: 708
June futures: 12,350 (-)
July futures: 12,351 (+2)
