Continued profit-taking weighed on Hong Kong stocks yesterday, taking the Hang Seng Index below the 16,000-point level as investors turned to second-line technology stocks. The index dropped 83.71 points, or 0.52 per cent, to close at 15,989.38. Brokers said Wall Street's slump on Tuesday - with the Dow Jones Industrial Average down 1.05 per cent - was an initial dampener on blue-chip trade. Turnover was $10.73 billion, compared with $12.88 billion on Tuesday. 'The lower turnover is a good sign, it suggests the selling pressure is not that heavy,' Phillip Securities research director Louis Wong said. He said the market had good support at the 15,850-point level, noting the index had rebounded nearly 200 points off its intraday low towards the end of the trading day. Shangri-La showed the highest percentage gain among blue chips, adding 7.9 per cent to $9.55, helped by reports of higher October tourist arrivals and hotel occupancy numbers. Market heavyweight and also most active counter HSBC finished 1.44 per cent weaker at $102.50. Red chips outperformed the market as investors chased large-cap and technology counters in the sector. Celestial Securities director Josephine Hui Suet-ming said some investment funds from Taiwan seemed to be investing in red-chip technology counters. A media report saying Beijing planned to lower the effective value-added tax charged on software developing companies helped bolster the sector. Nasdaq's rise to its new high on Tuesday also boosted technology counters. Computer maker Legend soared 18.15 per cent to a record high of $22.45, while publishing industry software developer Founder jumped 15.65 per cent to $6.65. Computer and electronic products maker Stone Electronic and satellite application products group China Aerospace both added more than 10 per cent. South China Brokerage research manager Patrick Pong said: 'I think investors were buying on the laggard concept, and those that are bigger and have better fundamentals have become targets. 'Many of these counters still have PEs (price-earnings ratios) way behind the overall market.' Large-cap red chip Citic Pacific rose 6.51 per cent to $23.70, while China Resources added 2.38 per cent to $10.75. Mr Wong said the Hang Seng Index would probably test the pre-financial crisis level of 16,700 points before the end of this month as rotational buying of laggard counters could further boost the market. He said property stocks could be pushed higher if results of government land sales early next week were favourable. 'Those regional funds that have been invested in Hong Kong recently will likely not leave the market ahead of the arrival of the year-end, as some of them are believed to be related to the avoidance of the millennium problem,' he said. Profit-taking and possible departure of overseas investment funds early next year could put pressure on the market, he said. DBS Securities institutional sales vice-president Geoff Galbraith said as volumes were expected to decrease with the approach of the holiday season, trading would become more volatile.