Hong Kong stocks ended lower yesterday in line with losses on Wall Street. Property and conglomerates saw the heaviest selling, as investors took profits on recent gains. Even some red chips saw their share prices trimmed following heavy gains on Monday and last week. The Hang Seng Index fell 45.19 points to end at 12,580.85. ING Barings sales director James Osborn said: 'The market doesn't look like it is breaking down, but it has not made up its mind to break out on the upside.' Swire Pacific A shares continued to slip, losing 2.15 per cent to $57. BZW analyst K.Y. Ng said: 'It is more sentiment than fundamentals.' He said many investors were switching out of the largely British-controlled conglomerate to focus on China-related stocks in the run-up to the handover. Cathay Pacific Airways, of which Swire owns a significant stake, fell 1.25 per cent to $11.80 on news that rival Dragonair would be able to expand its routes in China following the handover. Other blue chips to see losses yesterday were New World Development, down 1.45 per cent at $40.80, Great Eagle, which dipped 1.48 per cent to $23.35 and Wheelock, which lost 1.23 per cent to $16.10. In a rare move, Robert Fleming set 40 million covered call warrants on a basket of utility stocks, which comprises China Light & Power, Hongkong Electric, Hongkong Telecom and Hong Kong and China Gas. The bulk of the exposure is on China Light & Power in which Citic Pacific recently bought a 20 per cent stake. Investors took some profits on red chips, which have outperformed recently. China Resources Enterprise fell almost half a per cent to $20.05 despite announcing a 109 per cent rise in 1996 earnings. With blue-chip stocks trapped in a range, many investors were switching to second- and third-tier stocks. Mr Osborn said: 'It looks like quality control has gone out the window and people are now playing momentum.'
