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Suzanne Harrison

A sharp decline in the Tokyo market helped nudge Hong Kong stocks to a weaker close after quiet, cautious trading sessions yesterday.

 The Hang Seng Index closed 50.6 points, or 0.37 per cent, lower at 13,369.06 after trading stronger for most of the day. The benchmark index had reached a high of 13,524.12 points before the Japanese market slumped.

 Turnover was $5.97 billion, lower than Wednesday's $6.4 billion.

 Exporters led a sharp market drop in Tokyo on fears the Japanese yen would keep strengthening despite efforts to weaken the currency.

 In Hong Kong, analysts said players may have shied away from the market ahead of a speech - possibly indicating the direction of interest rates - by United States Federal Reserve chairman Alan Greenspan late yesterday.

 Tensions between Taiwan and the mainland were still alive and well, analysts said, and the war of words stemming from Taiwan's reference to 'state-to-state' relations continued to be an overhang in the market.

 'Tokyo took a hit and certainly this morning, the volumes were very low,' Prudential Bache Asia Pacific Research managing director Robert Rountree said.

 He said that since liquidity had driven the market up, then 'if it isn't [the mainland's problems with] Taiwan or the yen rate, people will still be looking for any reason to take a few profits'.

 Market sources said the mainland government's ban on the Falun Gong group was being watched with caution as there could be a strong reaction to the prohibition.

 Standard & Poor's had also downgraded the mainland's sovereign credit rating from BBB-plus to BBB earlier in the week.

 Pacific Challenge research director Alan Hutcheson said: 'China made an announcement about banning the sect and there is still a lot of uncertainty about the Sino-Taiwan situation.

 'I think clearly they [Taiwan] are looking to make a fairly strong statement. It's not over yet.'  Shares in luxury hotel group Hongkong and Shanghai Hotels dropped 2.89 per cent to $6.70 after the company announced a 90 per cent decline in net profit for the first half (Stock Split, Page 12).

 Wharf's stock jumped 2.63 per cent to $23.40 on positive sentiment surrounding the possible spin-off of its telecommunications arm.

 It was announced earlier in the week that Wharf's associate Wheelock could undertake a wholesale reorganisation of its operating arms, including a possible listing of its telecoms operations.

 Several other blue-chip property stocks performed poorly, possibly ahead of Mr Greenspan's speech.

 Sun Hung Kai Properties' stock finished down 1.8 per cent at $68, with Hutchison's 1.36 per cent lower at $72.

 Cheung Kong (Holdings) eased 1.09 per cent to $68.

 Mr Hutcheson said: 'I think with the property stocks, there is not a lot happening. There are some large tenders but we're now going into a quieter period.' 



Uncertainty over US rates, Beijing politics keep traders on sidelines