Momentum lifts index above the 14,500 barrier
Consolidation sets in as blue chips reach a four-year high and H shares face pressure over profit warnings
Hong Kong's leading stocks finished above 14,500 for the first time in more than four years yesterday, but gains were capped as investors digested hefty share price increases over the previous two days.
H shares remained under pressure after several companies, including China Eastern Airlines and Huaneng Power International, issued profit warnings. A drop in oil prices also sparked further profit taking in PetroChina, resulting in a decline of 25.05 points, or 0.51 per cent, to 4,865.83 in the H-share index. The index added 1.16 per cent on the week.
The Hang Seng Index finished up 12.75 points, or 0.09 per cent, at 14,504.24, extending the 52-month high from Thursday, after trading in a range between 14,444.58 and 14,550.17. The index added 539.82 points on the week, marking its best weekly performance since late May last year.
'The momentum is still very strong, but we may consolidate for a few more days as the index has gone up very fast,' one retail broker said. 'Some investors are starting to question whether it is still worth buying Hutchison Whampoa at these levels and want to stay put for a few days.'
Hutchison had been a key driver earlier in the week, rising 6.97 per cent in the first four days on expectations it may sell its Husky Energy subsidiary for a handsome profit as well as on a target price upgrade by Morgan Stanley.
But yesterday it fell 0.13 per cent to $75.05 amid indications that it is overbought.
Investors were still keen on Cheung Kong, however, which gained 2.11 per cent to $82.45. The property developer, which is benefitting both from easing concerns about interest-rate increases and the strong gains in Hutchison, added 11.26 per cent on the week.
Other property stocks also continued to underpin the blue-chip index, with New World Development rising 2.09 per cent to $9.75 and Hang Lung Properties up 1.27 per cent to $11.95. Sun Hung Kai Properties bucked the trend, slipping 0.06 per cent to $78.85.
A greater than expected 1.7 per cent rise in US retail sales last month was seen as supportive for HSBC, but institutional investors are cautious about the stock ahead of its interim earnings on August 1.
'The bank has made no major acquisitions this year so we don't expect the profit to rise substantially,' said Francis Lun Sheung-nim, general manager of Fulbright Securities. Still, buying by retail investors helped push the stock 0.16 per cent higher to $126.
CNOOC was the main drag on the index after suggestions it may raise its bid for US oil and gas producer Unocal above the US$18.5 billion it has offered so far.
'Investors are worried that it may be playing the whole bank to get this one company,' said Herbert Lau, chief investment officer of CASH Asset Management.
The offshore oil producer slid 4.1 per cent to $4.675 yesterday on top of a 1.52 per cent drop on Thursday.
PetroChina shed 2.44 per cent to $6 after Nymex crude oil futures dropped 3.68 per cent in New York overnight.
Huaneng Power fell 0.91 per cent to $5.45 after warning that its interim net profit would fall by 30 to 40 per cent due to higher coal prices.
China Eastern Airlines dipped 0.81 per cent to $1.22 after saying it would report a loss for the first six months due to rising fuel prices. China Southern Airlines, which fell 1.16 per cent on Thursday after it too projected losses in the first half, rebounded to finish 2.35 per cent higher at $2.175.
Alltronics finished unchanged at 80 cents in its first day of trading after hovering between 78 and 81 cents. The home electronics maker raised $72 million from its initial public offering.
After a bit more consolidation, market watchers said they expected the market to head higher.
'The bears have got trampled by the bulls and there is enough strength for [the Hang Seng Index] to go to 15,000 next week,' Mr Lun said.