Surging China plays extend share rally

PUBLISHED : Friday, 22 July, 2005, 12:00am
UPDATED : Friday, 22 July, 2005, 12:00am

HSI keeps winning run even as investors cash in property gains

Hong Kong-listed China stocks yesterday forged ahead for the second day running, as investors used an interest-rate increase by local banks as an excuse to take profit on blue-chip property counters.

Gains by CNOOC, China Mobile and BOC (Hong Kong) kept the Hang Seng Index above water, however. The benchmark index closed higher for the seventh day in a row - the longest winning streak in more than 18 months - adding 0.12 per cent, or 17.44 points, to close at 14,620.14.

'The long rally will exert more pressure on short positions and some investors will be thinking about taking the loss and square their positions,' said Tai Fook Securities sales director Andrew To.

'But the bulls still have the upper hand.'

China-linked stocks continued to benefit from Wednesday's data showing that the mainland economy grew at a faster than expected 9.5 per cent in the second quarter.

Market speculation about a near-term yuan appreciation was another supporting factor, while Federal Reserve chairman Alan Greenspan's comments overnight that the US economy would see 'sustained economic growth and contained inflation pressures' underpinned export companies.

The H-share index surged another 2.18 per cent, or 108.43 points, to end the day at 5,090.68, after a 1.84 per cent gain on Wednesday. Of the 37 H-share constituents, 22 ended higher.

'Blue chips are taking a breather and the money is flowing into H shares instead,' one equity salesman said.

China's largest oil producer, PetroChina, was the top H-share gainer, jumping 6.56 per cent to a record $6.50. The counter has risen 16.07 per cent in the past month.

Yanzhou Coal Mining climbed 6.15 per cent to $6.90, bringing its gains for the past two days to 10.15 per cent. Jiangxi Copper added 5.84 per cent to close at $4.075, while Aluminum Corp of China rose 5.49 per cent to $4.80. Maanshan Iron & Steel gained 3.85 per cent to $2.70.

Of the blue chips, CNOOC rose 3.21 per cent to $4.825 after Chevron, its rival in the bidding for US oil firm Unocal, raised its offer to US$17.1 billion in cash and stock. CNOOC has bid US$18.5 billion in cash.

Index heavyweight China Mobile rebounded 0.83 per cent to $30.40 after falling 0.82 per cent the previous day.

BOC (HK), which raised its prime lending by 25 basis points to 6.5 per cent, added 1.99 per cent to close at $15.40. Bigger rival HSBC followed suit yesterday, raising its best lending rate to 6.5 per cent. It rose 0.08 per cent to $125.60.

After major local banks increased their lending rates, interest-rate-sensitive property stocks saw some consolidation pressure.

Henderson Land was the worst index property performer, slipping 1.9 per cent to $38.50. Sino Land fell 1.06 per cent to $9.30.

Cheung Kong dropped 1.32 per cent to $82.10, while Sun Hung Kai Properties lost 0.81 per cent to $79.40.

MTR Corp rose 1.93 per cent to a new high of $15.85.