Telecommunications and utility counters pushed the Hong Kong stock market up 1.71 per cent to close above the 13,000-point mark for the first time in 18 months yesterday as investors took advantage of the sectors' relatively low valuations against the blue-chip property and finance companies. The Hang Seng Index rose 221.72 points to close at 13,127.02. Turnover was $8.21 billion. Except for Hongkong Telecom, which has rallied on the Internet theme, utilities have not paced the recent rally. 'People have been buying utility companies because they are still lagging behind the market,' Mansion House Securities research head Stanley Ng Wing-chark said. The biggest blue-chip gainer was Hong Kong and China Gas, which soared 11.11 per cent to $12 on follow-through buying after the company announced it had bought back 1.16 million shares last Friday. The biggest movers of the blue-chip index were China Telecom, which drove the Hang Seng Index up 57 points, while Hongkong Telecom raised it 34 points. China Telecom performed well ahead of tomorrow's results announcement which investors may be punting on. The stock rose 6.41 per cent to $16.60. Kim Eng Securities utilities analyst Alfred Li put the fair value of the stock at $18.30 and said its annual results would show a profit of 6.7 billion yuan (about HK$6.23 billion), an increase of 36 per cent. 'The stock is cheap in terms of cash flow,' Mr Li said. Overall, the Hang Seng utilities index outpaced the blue chips with a gain of 4.62 per cent. 'When the market has gone up to this sort of level, you start to see some utilities buying in the market now - it is just people adding to their portfolios,' Amsteel Securities associate director Sean Li Chok-sun said. Selling pressure was noted in some property counters, with Sino Land falling 1.61 per cent to $4.575 and Hang Lung Development slipping 3.41 per cent to $9.90. Henderson Land and Swire Pacific edged lower but property giant Cheung Kong bucked the trend, rising 2.58 per cent to $69.50. Some analysts felt investors were also beginning to move out of Hongkong Telecom after its strong gains since it announced an alliance with United States software giant Microsoft Corp for its interactive television service. 'People are starting to switch out from Hongkong Telecom into other utility stocks,' Mr Li said, adding that he would recommend moving into China Telecom. Turnover was lower than the double-digit figures seen last week, but brokers still felt foreign investment funds were buying, albeit at a lower rate. Tai Fook Securities deputy managing director Lennon Chan Wing-luk said: 'The turnover is dropping a little bit so you can see that the funds are getting a little bit cautious now.'
