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Stephen Seawright

Hong Kong stocks gained 1.08 per cent yesterday on the back of a rally on Wall Street but trading was cautious as the market awaited the details of Pacific Century CyberWorks' takeover of Cable & Wireless HKT.

 The Hang Seng Index rose 185 points to 17,169.44.

 Sentiment was boosted by the Dow Jones Industrial Average's rise on Monday to above the 10,000-point level again, closing up 1.78 per cent at 10,038.65 points.

 'The [Hong Kong] market rebounded on the basis of a strong Wall Street,' Celestial Asia Securities director Eugene Law Ka-kin said.

 Turnover of $12.96 billion was lower than in recent trading days, with HKT and CyberWorks remaining suspended as they prepared to release the merger terms.

 'The market was waiting for details of the deal,' Tung Tai Securities research manager Kenny Tang Sing-hing said.

 Those details were not made public until after the market had closed.

 Smaller blue chips made the biggest gains yesterday, with Johnson Electric jumping 7.21 per cent to $51.25 and Shangri-La rising 5.04 per cent to $6.25.

 Brokers said investors were shying away from the larger traditional blue chips due to lingering concerns about the pace of rising interest rates in the United States which would pressure Hong Kong to follow suit.

 'The players are still cautious about traditional blue chips, particularly the interest rate sensitive ones,' Mr Tang said.

 'They are now buying some less interest rate sensitive stocks,' he said.

 HSBC gained only 0.28 per cent to close at $89.25 despite the company announcing better than expected pretax earnings growth of 21 per cent to US$7.98 billion.

 Technology stocks performed strongly after sharp falls over the past few days.

 'The rally is mainly because these stocks have been oversold in the past few days,' KGI Asia Securities associate director Ben Kwong Man-bun.

 One big gainer was Vanda Systems & Communications, which soared 43.13 per cent to $7.30 after Hutchison agreed to buy $198 million of convertible bonds in the company and form an Internet joint venture.

 The red-chip index leapt 4.78 per cent on gains in technology stocks, while the H-shares index climbed 1.73 per cent.

 Red-chip heavyweight Legend jumped 10.76 per cent to $36 after the announcement of a memorandum of understanding with CyberWorks to jointly develop broadband Internet business in the mainland.

 This triggered gains in other red-chip technology stocks. China Aerospace soared 22.12 per cent to $2.125 and China Everbright Technology moved up 21.27 per cent to $1.14.

 'The red-chip index is up but if you look at the individual stocks, it is mainly led by the strong performance of some technology stocks,' Mr Kwong said.

 Technology stocks were expected to gain today on the debut of Tom.com, which is forecast to soar above its issue price of $1.78. The share offer was heavily subscribed.



Dow brings relief amid wary wait for CyberWorks-HKT deal