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SCMP Reporter

Signs of Japanese determination to clean up its financial mess sent Tokyo markets charging higher yesterday, and Hong Kong shares followed.

The Hang Seng Index finished 1.3 per cent higher on a turnover of HK$9.35 billion.

'The market rallied strongly in the afternoon on the back of the Japanese market,' Dao Heng Securities institutional sales head Raymond Tsui said.

An about-face in the Nikkei-225 Index - which closed up 2.61 per cent after being down 3.46 per cent - was prompted by the announcement that Sanwa Bank had doubled its bad debt provisions and by aggressive words from beleaguered Prime Minister Yoshiro Mori.

Earlier, the Hang Seng Index dived to an intraday low of 12,947.59 points after another day of carnage on Wall Street.

'We rebounded [following] the Japanese market,' Tanrich Asset Management director Kennis Leung said.

'Just before the market closed, there was positive news regarding the banks. It looks like [the Japanese] are taking positive steps towards improving the existing problems and this relieved some of the market's worries. There was across-the-board positive sentiment.'

However, HSBC, the market's heaviest weighted stock, fought a tug of war with China Mobile as the bank continued to weaken, sliding 1.04 per cent to settled at $95. Since the release of the bank's full-year results on February 26, the counter has fallen 18.45 per cent.

China Mobile climbed 2.71 per cent to $37.90.

Broad concerns over the prospects for global mobile operators should not concern investors of China Mobile, DBS Securities analyst Wallace Cheung said.

'The growth of China Mobile is still coming from a proven business model in a market with relatively less competition,' he said.

However, he said China Mobile's upwards movement was capped by pending downward readjustment in the Morgan Stanley Capital International (MSCI) indices and the decision by the mainland company's management to delay, until the end of the year, any resolution of the calling-party-pays (CPP) question which hammered the stock late last year.

'I do not see it going back to, say, $50 because it is still susceptible to the overhang of the MSCI and . . . the CPP issue,' he said.

Nonetheless, with Hutchison and HSBC under attack recently from analyst downgrades, 'there is only China Mobile', Mr Cheung said.

With just six days to go before the meeting of the United States Federal Reserve, Ms Leung said the recent stock market rout, spate of earnings warnings and Wednesday's weak US inventory figures meant that aggressive interest-rate cuts were on the cards.

Mr Tsui said the recent misery which had descended on the market could well have reached an end.

'Subject to any catastrophe overseas, looking at Hong Kong, I think we have seen the bottom,' he said.

Davidw@scmp.com



Stocks take heart from Tokyo's U-turn after action on financials' problems