The flagship companies of Li Ka-shing could lead Hong Kong blue chips even higher this week as the group's key telecommunications assets look to be back in play. Brokers said this and other corporate news should offset disappointment over the apparent failure of the World Trade Organisation talks in Beijing. A second boost could come on Wednesday if the United States decided not to raise interest rates at tomorrow's Federal Open Market Committee meeting, they said. 'One's loath to say we'll go forward in such a strong market . . . but in index terms there's a lot of fire power left,' said Kim Eng Securities head of research Stephen Brown. The Hang Seng Index pushed 4.25 per cent higher last week to 14,189.67 points, led by China Telecom and Cable & Wireless HKT amid a worldwide rally in telecommunications stocks. Evidence gathered at the weekend that Britain's Vodafone AirTouch would be among several possible suitors for Germany's Mannesmann, in which Hutchison acquired nearly 10 per cent as part of the recent Orange deal (Stock Split, Page 12). It was also reported at the weekend that Hutchison Telecommunications (Hong Kong) was close to finalising a deal to sell a strategic stake in its local fixed-line business to a US investor. Mr Brown believed the counters that traded on global themes - from Hutchison to HKT to HSBC - would continue to push the index higher in the short term. 'We're going to get to from 14,800 to 15,200. If they [the mainland] go into the WTO, then we'll get there quite quickly. If not, then in 10 days,' Mr Brown said. He saw further support from blue-chip property counters, which have lagged recent gains, and from HSBC. However, for HSBC in particular, tomorrow's decision on interest rates and Wall Street's reaction will be key. In US trading on Friday, bond yields fell and stocks rose as data released on productivity and retail sales pointed to benign inflationary pressures. However, many economists expect a rate rise tomorrow amid strong US economic growth. Some local brokers also sounded a note of caution on the liquidity front. After the Tracker Fund's initial public offering, last month's multibillion-dollar China Telecom placement and a subsequent share rally, some expect the tap could run dry. 'I expect a lack of follow-through buying,' a futures trader at a European investment bank said. 'You wouldn't expect us to be able to rally up to 15,000 no matter what stories are out there. I see a range of 13,600 to 14,400.' A broker said Friday's $2.86 billion turnover in the Tracker Fund was a one-off event due to the arbitrage opportunity provided from a spread of about 10 per cent between the listing price and Friday's trading levels for the Hang Seng Index. He said most of the buyers were the in-house trading desks of large institutional investment banks, which could use the units for arbitrage and hedging purposes.
