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SCMP Reporter

STOCKS fell heavily yesterday following signs the United States equity market might be heading into a substantial retreat.

  The Hang Seng Index closed 93.73 points down at 9,680.75, a loss of 0.96 per cent.

  Turnover was moderate at $3.61 billion, up from the revised $2.64 billion for Thursday. Volume was also improved, with 1.24 billion shares changing hands.

  Brokers said the main reason for the fall was the bad news from Wall Street which, in the absence of local news, was providing the lead for the Hong Kong market.

  The Dow Jones Industrial Average dropped 49.86 points to 4,703.82 on Thursday on concern about a string of poor earnings announcements.

  Samuel Lau, research director with China Everbright Securities, said: 'It wasn't a very good day. People are concerned about the Dow, and most expect it will keep falling.'   Adding to the negative sentiment is uncertainty about whether US interest rates will be cut at the next meeting of the US Federal Reserve Open Market Committee next month.

  The index opened the day with a slide. From the previous close of 9,774.48 it dropped sharply to reach the day's low of 9,665.66 after 30 minutes of trading.

  At this level some bargain-hunting began, helping the market regain some ground through the morning. It closed for lunch at 9,716.61, an intra-day fall of 57.87 points.

  The afternoon brought renewed selling, with the index slipping below 9,700 for most of the session.

  Among the 33 blue chip stocks, six advanced, one was left unchanged and 26 went down.

  Banking counters led the market down with the Hang Seng finance sub-index dropping 136.18 points to 9,286.48, a fall of 1.45 per cent.

  Index giant HSBC led all counters in net loss, falling $2 to $111 in the day's highest turnover of $267.13 million.

  Hang Seng Bank fell 50 cents to $64 and Bank of East Asia slipped 25 cents to $27.05.

  Properties stocks were also down sharply. The Hang Seng property sub-index lost 124.45 points to 16,920.75. Sino Land led all blue chips in percentage loss, falling 20 cents, or 3.3 per cent, to $5.85.

  Sun Hung Kai Properties fell 25 cents to $60.50, Cheung Kong lost 20 cents to $43.10 and New World Development shed 40 cents to $29.70.

  Utilities outperformed the market, with the Hang Seng utilities sub-index falling 57.81 points to 10,205.39.

  China Light & Power led all stocks in net gain, climbing 20 cents to $40.80.

  Abbott Lau, salesman at Schroder Securities, said: 'China Light was the feature of the day. They are announcing their results soon and it is expected they will be at the top end of market estimates.'   The other blue chip utilities shone less brightly. Hongkong Electric lost 40 cents to $26.05, Hongkong Telecom fell 10 cents to $13.30 and Hongkong & China Gas slipped 10 cents to $12.45.

  Among commercial and industrial counters, Cathay Pacific and its parent Swire Pacific were again the heaviest losers.

  Both stocks have been hit hard this week after revelations one of Cathay's former employees has been hired to help launch a rival airline.

  Cathay fell 30 cents to $11.15 and Swire lost 75 cents to $57.75.

  Abbott Lau said: 'The selling on Swire, in particular, has been very strong, but we expect it will gain support before much longer.'   Second and third line counters were mostly quiet and traded in tight ranges.

  One that attracted interest was New World Infrastructure which closed at $13 on its first day of trading.

  The debut by the infrastructure spin-off of New World Development was judged a cautious success by the market as the counter advanced despite heavy falls elsewhere.

  Albert Lau said: 'After what we have seen on Wall Street, the stock held up very well.'   Food importer Ng Fung Hong, which debuted on Wednesday, continued to fall short of expectations. It fell 7.5 cents to $3.375.

  The Hang Seng MidCap 50 Index fell 9.91 points to 1,246.88.

  Brokers are mixed about where the market is headed but many see it entering a further stage of consolidation. Samuel Lau said: 'People are very disappointed that the index fell through the 9,700 barrier as they were looking at 9,700 to provide support. Next week the index may head down towards 9,600.' 



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