Launch of Tracker, new share issues seen mopping up buyers' capital

The Hang Seng Index fell 1.79 per cent yesterday as investors pulled back from the stock market, expecting a withdrawal of liquidity amid the sale of the Government's Tracker Fund and continued fund raisers.

The blue-chip index closed 233.37 points lower at 12,759.35 on a turnover of $7.7 billion.

Investors were concerned the Tracker Fund was driving the market down, while some were selling blue-chip stocks to finance purchases of the index-tracking fund, which offers customers a discount to market value.

'Institutional investors can sell their blue-chip shares at a higher price and buy the mutual fund unit at a lower price,' Kingsway Securities analyst Patrick Chia Tai-man said.

The launch of oil producer CNOOC's $1.92 billion public offering in Hong Kong and China Telecom's share placement only served to remind investors that liquidity would tighten in the near term.

South China Brokerage vice-chairman Howard Gorges said: 'Fund-raising exercises under way or soon to be under way are a cloud on top of the market.' SG Securities head of Asian sales trading Miles Remington said: 'This has not caught investors by surprise but has confirmed what investors already knew - that a lot of liquidity will be taken out of the market.' Hutchison Whampoa fell 3.33 per cent to $72.50, which dragged the index down 46.1 points.

'Relative to other stocks, Hutchison has performed well and has run into a bit of profit-taking,' Mr Gorges said.