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SCMP Reporter

Hong Kong stocks closed higher yesterday after investors chose to ignore overseas gloom and hunt for bargains.

The Hang Seng Index finished 181.92 points, or 1.2 per cent, stronger at 15,280.56 on a turnover of HK$11.34 billion.

'Technically speaking, I see this rally as a technical rebound after the sell-off of the last two days,' Phillip Securities research head Louis Wong Wai-kit said.

United States inflation fears and a plunging Wall Street had been weighing heavily on Hong Kong this week.

However, a fresh decline on Thursday and profit warnings from technology giants Sun Microsystems and EMC Corp were shrugged off by investors.

Celestial Securities research head Herbert Lau Chung-kwan said the warnings failed to surprise. They were just two more firms on a long and distinguished list of US corporate giants laid low by a sharply slowing economy.

'You have to get used to these earnings disappointments,' he said.

Mr Lau said the market rebounded after over-reacting to figures on Wednesday which showed US consumer prices were rising faster than expected, tarnishing hopes of interest-rate cuts.

Pacific Century CyberWorks climbed 4 per cent to $4.55 on news the telecommunications vehicle chaired by Richard Li Tzar-kai would be buying a satellite business from Hutchison, headed by his father Li Ka-shing.

Mr Wong said the familial connection was not the only story behind the deal.

'It can be seen as a commercial decision because Hutchison made a tiny profit out of it after all,' he said.

However, Mr Wong said the market saw the deal as a sign Mr Li Ka-shing could be tempted to intervene to support the flagging share price of CyberWorks - an issue which had been much speculated on earlier this year.

'Inevitably, the credibility of the [Hutchison] group will be undermined,' he said.

Hutchison slid 1.08 per cent to $90.75 while associate Cheung Kong fell 1.31 per cent to $94.

China-related stocks outperformed the market as investors positioned themselves for next week's reopening of the mainland's B-share markets.

The foreigner-only markets were suspended last week following the announcement that mainland investors would be allowed in for the first time.

The H-share index soared 4.22 per cent.

Merrill Lynch head of China research Lan Xue said the interest in H shares was part of a greater theme rather than simply opportunists hoping to take advantage of valuation differentials.

'There has been money wanting to buy China for some time, it just happens to be that the B-share news is helping momentum but the H shares started to rally before this news - this is general buying interest in China shares.'

Ms Lan said that with the interest-rate cut theme done to death in the broader market, China stocks were an increasingly attractive proposition.

Davidw@scmp.com

Key Figures

Close: 15,280.56 (+ 181.92)

Turnover: $11.34 bln

Volume: 6.59 bln shares

Day's high: 15,302.7

Day's low:15,042.81

Advanced: 489

Declined: 184

Unchanged: 392

February futures:15,272 (+ 253)

March futures: 15,270 (+ 272)



US worries ignored while players hunt for bargains after sell-off