Strong start heralds return of optimism
THE year began with a bull run and optimism that has been unknown for some time. On the first trading day of 1996, the Hang Seng Index gained 131.48 points, or 1.31 per cent, to 10,204.87.
It bodes well for the year when compared with the plunge of 346.9 points on January 2, 1995 to 7,844.14.
Talk of the week was the bullishness in property counters, with Cheung Kong in particular making solid gains. The sector looks set to make a comeback following a slight relaxation of the government's cooling off measures.
Also in the spotlight was the $3.24 billion placement by Citic Pacific to raise funds for their China projects.
Brokers expected that more placements would be announced when people realised there was a more desirable trading level than in 1995.
The week also saw an influx of foreign buying, particularly from the United States. Singapore, Bangkok, Manila, Jakarta and Kuala Lumpur all recorded gains of 2.5 per cent or more.
Traders said a surge in the dollar through the 105 yen level provided the spark for the buying spree on Thursday.
The further strengthening of the dollar is expected to help Asian markets.
Hutchison Whampoa's restructuring on Wednesday also fuelled expectation that the group is to spin off its Hong Kong telecom operations and its British personal communications network, Orange. Analysts said Orange was recently beating its competitors.
But Hutchison shares were weak on Friday, dropping 1.47 per cent to $50.25, though turnover was a healthy $576.5 million.
In the US, the Dow Industrials dropped 13 points to 5,159 after hitting a low of 5,133.39, but traders in Hong Kong are expecting a correction in the coming week.
By Thursday, most of the premium in the spot index future contract was erased before the market closed, which was seen as a sign that trading sentiment was levelling off and raised doubts whether the bull run would continue.
The index closed up 176.46 points, or 1.7 per cent, at 10,573.9, while the spot index future contract finished up 75 points at 10,575.
Brokers said there should usually be a 100-point premium in the futures to reflect confidence in the cash market.
The narrow premium therefore pre-conditioned the fall in trading on Friday morning.
Since trading resumed on Tuesday, the index gained 500.51 points up to the Thursday close, and brokers began to suspect that any more upside would be limited.
H shares were outstanding with the Hang Seng China Enterprises Index closing up 84.02 points or 10.53 per cent at 881.84.
The index closed the week at 10,529.9, still up 456.51 points from the first date of trading in 1996.
