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Josephine Ma

SHORT covering in the afternoon recaptured much of the morning loss with the Hang Seng Index closing at 9,432.2 points, down 4.29 points, or 0.05 per cent.

  Turnover dropped slightly to $3.95 billion, compared with Wednesday's adjusted $4.3 billion.

  Market players said buying at the 9,200 level helped stop the index from plummeting.

  The index opened lower after a dip on Wall Street and bond markets on Wednesday.

  The index, which shed 198.07 points on Wednesday, soon plunged to the intra-day low at 9,240.09 points in early trade.

  Some support was found at the level, which was more than 370 points lower than the market close on Tuesday, and the index lifted to 9,320 before the morning close.

  At lunch the index was 128.64 points down, or 1.37 per cent, at 9,290.27 points.

  The afternoon turnaround was unexpected with the index regaining much of the loss to close at the day's high.

  Brokers said the morning plunge was led by the slump on Wall Street on Wednesday.

  The long-awaited correction of the Dow put a damper on sentiment in Hong Kong, which was further hit by a slump in the United States' bond market.

  The US long bond fell eight basis points after the speech of Federal Reserve chairman Alan Greenspan on Wednesday.

   While Hong Kong was undoubtedly sensitive to US equity markets, market players were quick to point out that most of the selling on Wednesday was futures-related activity by hedge funds - which were not as heavy yesterday as most of the arbitrage activity had been .

  Rising tension between the mainland and Taiwan and disappointment over talk on an interest rate cut were reasons the index dropped by almost 200 points on Wednesday, brokers said.

   Investors started to cover their positions when the index fell to a more comfortable 9,200 level, they said.

  A salesman from Schroder Securities, Abbott Lau, said: 'Some funds were buying in the market and many of them were net buying.'     He said some overseas buying was in evidence despite most of the buyers being Hong Kong investors.

    Sassoon dealing manager Simon Tam said: 'The market was affected by the US in early trade. But dealers pushed the index up later when they found the downside of the index was limited.'    A recovery of the stock markets in the region also lifted the sentiment, brokers said.

  While Taiwan was still overcast because of the missile threat, other Asian markets had turned around from the interest rate cut disappointment.

  The Taiwan Weighted Index dropped 140.07 points, or 2.7 per cent, to 5,047.72 points.

  The Stock Exchange of Thailand index, which dipped on the back of political uncertainties recently, added 27.14 points, or 1.97 per cent, to close at 1,406.51 points.

  Singapore added 6.09 points and Kuala Lumpur 0.81 points yesterday.

  But brokers were not certain if the Hang Seng Index was ready to take a breather because the turnover yesterday remained relatively high.

  Mr Lau said: 'If the turnover dropped below $3 billion, that might mean investors have finished adjusting their position [after the recent volatility].'   Mr Tam said the roll-over of the July contracts, which was expected to be more active next week, would cause more volatility in the market.

  He said the index might be able to stabilise at the 9,400 level in the absence of fresh incentives.

  Brokers generally agreed the index would trade at between 9,200 and 9,600.

  Most of the blue chips recovered yesterday.

   HSBC closed unchanged at $102 on turnover of $358 million.

  Hongkong Telecom also closed unchanged at $14.85 on turnover of $284 million.

  Hang Seng Bank rose 50 cents, or 0.8 per cent, to close at $62.75 on turnover of $243.9 million.

  The property sector was the worst performer yesterday with the Hang Seng properties sub-index closing at 16,187.64 points, down 47.74 points, or 0.29 per cent.

  SHK Property closed at $57.25, down 50 cents, or 0.87 per cent on turnover of $193.5 million.

  Henderson Land shed 40 cents, or 0.89 per cent, to close at $44.5 on turnover of $141.75 million.

  The best performer yesterday was Yaohan HK which rose 11 cents, or 14.86 per cent, to 85 cents, on turnover of $1.6 million.



Buying at 9,200 helps stem index downturn