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Focus on H shares sees index flourish

Adela Ma

THE market opened with a rally and hit a 1995 high of 10,657.31 yesterday.

Brokers said attention had turned to laggards, with H shares making most gains.

The Hang Seng Index closed at 10,634.5, up 94.49 points or 0.9 per cent, on a turnover of $5.51 billion, compared with Friday's adjusted $8.2 billion.

Dharmala Securities research director Ben Kwong said the index kept testing the resistance level in the morning session and only came down when profit-taking started to wipe off early gains before finishing at noon in sideways trading.

The highlight was with H shares, red chips and any stock that has to do with China.

Mr Kwong said the market welcomed the speech by the governor of the People's Bank of China, Dai Xianglong, at a Beijing financial conference on Sunday.

Mr Dai told the gathering China would maintain a 'relatively tight' monetary policy in order to control inflation.

While the market has been expecting an easing of credit, Mr Dai said the time was not ripe for a relaxation of the credit squeeze.

Mr Kwong said the word 'relatively' was very important because the degree indicated that at least it was not going to be worse.

This at least cleared up some of the major hurdles about these stocks.

Brokers said most H shares had suffered badly because of the credit squeeze, and any indication that the economic noose would not be drawn any tighter would easily send the battered stocks up.

The China Enterprises Index closed at 915.63, up 32.98 points or a remarkable 3.74 per cent.

Mr Kwong said the weakening yen helped these stocks because they sourced their components from Japan and profits were eroded at the time of the strong yen.

State-owned Qingling Motors added 25 cents or 10.75 per cent to $2.57. That was quite a gain for the day as the share has been depressed for some time.

Red chip Shougang Concord Grand added 13.72 per cent or seven cents to 58 cents.

Hualing gained a hefty 16.49 per cent or 16 cents to $1.13, a similar level seen more than a month ago. The gain was the biggest of all stocks.

The air-conditioner maker had been under pressure because of a strong yen.

Sun Hung Kai Securities institutional sales manager Kent Rossiter said: 'It was a pretty good trading day with a good volume given the fact that Japanese investors are on holiday.' He said there was obviously European buying in the market in the last 20 minutes of trade that shored up the index but was unable to thrust it through the day's high recorded in the morning.

A centrepiece deal for the market was the sale by Wharf of its Omni Hotels Corp in North America for more than US$500 million.

The disposal of the hotel business to the family of Texan oil tycoon Reese Rowling was said to be a result of Wharf's determination to secure a standing for its telecommunications business.

Mr Rossiter said: 'Some investors are worried at spending on Wharf Cable. They're just afraid that it won't earn profits that it was originally projected to earn.' Wharf was the 10th heaviest traded stock yesterday with 4.58 million shares worth $133.44 million changing hands. The stock rose 65 cents to $29.20.

Mr Rossiter said there was more interest in blue chips such as Swire Pacific, Hang Lung Development, and even Sun Hung Kai Properties, which seemed to gain from the pressure of its mammoth share placement.

Hopewell's announcement about the make-up of its new subsidiary, Consolidated Real Estate and Transport Asia, did not greatly surprise the market and was seen as positive news. The stock closed up five cents to $5. The rise was mild compared with last week's when rumour surrounding the group flooded the market.

It was the fifth heaviest traded stock on a turnover 41.33 million worth $207.56 million.

Hutchison Whampoa was the heaviest traded on 6.38 million shares worth $316.1 million. The stock rose edged up 10 cents to $49.50.

Vitasoy International was expected to resume trading today after the unprecedented recall of millions of its paper pack drink products.

The group's accounts look grim and the share price is expected to plunge once trading begins.

Tung Fong Hung announced to the stock exchange that there were negotiations continuing about assets acquisitions, provoking its irregular share price movements.

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