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Suzanne Harrison

China Unicom had a strong influence on stocks even before it began trading, with the Hang Seng Index moving higher yesterday on the back of gains in telecommunications-related counters.

The Hang Seng Index finished up 151.4 points, or 0.94 per cent, at 16,238.14 on a turnover of HK$8.69 billion.

Analysts said investors in China Telecom and Hutchison were punting on a successful listing for Unicom, the mainland's second largest telecommunications group.

The counter, whose global listing raised more than US$5 billion, began trading in New York yesterday with its Hong Kong debut scheduled for today.

Traders said much of the buying of Unicom competitor China Telecom was in anticipation of increased positive sentiment towards the sector under a strong Unicom debut.

Hutchison also fared well ahead of the listing as it had announced it would take a US$400 million stake in Unicom.

'It was pretty straight forward [yesterday] . . . the movers were related to a positive listing of Unicom,' said John Lau of Nomura Securities.

One dealer concluded that Unicom's sponsor, Morgan Stanley Dean Witter, had a vested interest in buying China Telecom to ensure Unicom debuted at a lower ratio to China Telecom.

'Morgan Stanley, as co-lead manager of the Unicom deal, has an interest in making sure China Telecom trades strongly as Unicom needs to come in at a discount to China Telecom,' he said.

Furthermore, there has been strong interest in Hutchison after its Canadian-based associate Husky Oil announced a US$3.02 billion buyout of Canadian-listed Renaissance Energy in a bid for Husky to go public.

Analysts have been bullish on the deal.

'Hutchison is going to make money out of that,' one broker said of the Husky involvement.

Hutchison yesterday rose 1.26 per cent to HK$100, with China Telecom jumping 3.46 per cent to $67.25.

Technology-related gains were also seen in the broader market as Internet favourite Pacific Century CyberWorks moved up 2.86 per cent to $16.15.

The technology-heavy Growth Enterprise Market gained 3.14 per cent.

Market watchers were hesitant when speculating on an imminent rush back to technology stocks after a recent run on banks and property counters.

They said with the interest rate environment still uncertain despite earlier relief interest rate rises were over, a shift into telecommunications and select technology stocks could be under way.

Furthermore, the Nasdaq Composite Index's break through 4,000 points on Tuesday could contribute to such a rotation.

'What we're seeing is a shift out of old economy and interest rate sensitive stocks into tech stocks,' ING Barings head of sales trading Dan Miller said.

'It's a global trend . . . it's been around for a couple of days now.

'Interest rate stocks ran up very aggressively in Asia when we started seeing the benign interest rate numbers coming out of the States, and now the money is being put back into tech.

'When the Nasdaq hit 4,000, it raised people's eyebrows in Asia.' Another trader said: 'I'd say there is now more willingness to take a punt'.

Financial heavyweight HSBC shed 0.55 per cent to $90.25, with Swire Pacific dropping 3.45 per cent to $44.70 and Sun Hung Kai Properties tumbling 2.15 per cent to $56.75.



Unicom gets bulls into action