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SCMP Reporter

Hong Kong shares ended a roller-coaster year and a two-day gain yesterday, closing slightly lower on renewed regional currency fears, brokers said.

 The Hang Seng Index dipped 32.45 points to 10,722.76, bringing the index's losses for the full year to 20.29 per cent.

 Turnover for the half-day session was a good $4.94 billion compared with Monday's $3.25 billion over a full day.

 An interesting feature of the trading was a number of small All Ordinaries stocks that rose dramatically, going against the main index's tide.

 Among these, sports shoe manufacturer KTP ended the day up 49.43 per cent and mainland investment firm China Assets closing up 19.32 per cent.

 KTP financial controller Russell Lee said: 'An announcement regarding the company will be made on the second of January.'  He said the yesterday's rise was because of a purchase by an existing shareholder.

 Brokers said the blue-chip index opened sharply higher, buoyed by a gain on Wall Street and a 114.79 point premium between January futures and the cash index.

 The gains were quickly eroded as familiar fears about regional stability returned, they said.

 A Lehman Brothers trader said the market's major concern was the volume of cash that had exited the region since October.

 'Under the Morgan Stanley Capital International Index - which all funds must adhere to - there is a minimum amount of money that must be kept in Asia, depending on the risk level of the fund,' he said.

 'With returns in the fixed-income markets and other stock markets looking better, Hong Kong and Asia could be left with just that minimum.'  Foreign investors continued to be wary of the region, despite International Monetary Fund programmes in South Korea, Indonesia and Thailand and moves to reform the Japanese economy, he said.

 Another trader said it appeared that Thailand and Japan were making 'ineffectual reforms'.

 'It's scary that the Japanese Government intervened to support the yen last week - we need more than band-aid solutions,' he said.

 South China Brokerage director Howard Gorges was more optimistic.

 'Japan is doing more to rectify its problems this time than it has in the past,' he said.

 Domestic factors would be less important in the coming weeks, Mr Gorges said.

 He said the market movements on Wall Street and in Tokyo would set the tone for the trading in Hong Kong.

 The trader said the market might have bottomed.

 'Over the last few months the falls have been retail driven but now everyone has got out,' he said.

 Mr Gorges said foreign investors were surveying Asia for opportunities and that it would not take much buying to push many Asian markets up sharply.

 'Hong Kong is the only market where these gains could hold,' he said.



Index dips on regional fears