Laggards catch the rally

IT was a day for the laggards yesterday after having missed out on the market rally of the past two weeks.

Cathay Pacific jumped 50 cents to $10.90 to move the index 8.21 points on expectations that the worst is over for the company.

Some brokers also said the stock jumped on rumours that the Civil Aviation Administration of China (CAAC) was about to increase its stake in Cathay Pacific.

Barclays de Zoete Wedd director K.S. Ng said buying interest was renewed in defensive counters and laggard stocks.

Hongkong Telecom gained 10 cents to $11.50 while Hongkong Electric gained 30 cents to $18.70 to give a combined lift of 6.56 points to the index.

The Hang Seng index reached another high yesterday when it closed the day 32.18 points up at 7,560.97 as buyers continued to pour money into the market, buoyed by the recent good interim and final results of major stocks.

Turnover was a healthy $4.63 billion.

August futures closed at a 30.97-point discount to the cash market.

The market made a nominal gain when it opened for trading in the morning and fell shortly afterwards as investors sought to lock in profits.

When trading resumed in the afternoon, buyers returned in strength to create an intra-day high of 7,570.

Brokers expect the index to continue trading at least at the current level and at the same time they are optimistic that the market could go higher.

SBCI derivatives salesman James Vinall expects the market to hold steady because of the positive mood.

''The market is comfortable because it has been rising gradually as a lot of the new entries into the market were looking at the long-term,'' he said.

''People appear to be very positive about the market and are buying for sensible and fundamental reasons,'' he said, adding that there was no ''crazy, euphoric'' buying.

He also said there were no significant sell orders.

The interim results of Cheung Kong, Hutchison Whampoa and Hang Seng Bank scheduled for today are expected to be a factor in the market's movement.

''If the three stocks perform up to people's expectations of good earnings, we may see some profit-taking,'' Mr K.S. Ng said.

All three stocks took a tumble yesterday as investors turned cautious and sought to lock in profits ahead of the interim results.

Cheung Kong fell 10 cents $27.80 on a turnover of $98 million while Hutchison fell 10 cents to $22.90 on a turnover of $227.96 million.

Hang Seng Bank fell 50 cents to $61.50 on a turnover of $141.86 million.

Mr Ng expects market focus to shift at the end of this month when the reporting season finishes.

''The market will then look for other news - either on the political or economic front,'' he said.

He said people were currently not paying much attention to news on China's economy as investors were bullish about the market as it tested new highs.

''That does not mean that they are completely ignoring the news. The effect of the news will come later,'' he said.

HSBC Holdings held steady yesterday at $85.50 on a turnover of $288.86 million.

Brokers are taking a second look at the stock and re-rating its earnings upwards.

World International jumped 90 cents to $11.30 following Wednesday's announcement of Wharf Holdings' 44 per cent net profit rise in the first half of the year to reach $1.38 billion on enhanced results from property disposals.

World International, the parent company of Wharf Holdings, added 10.52 points to the index.

At the same time, Wharf Holdings gained 10 cents to $20.70.

Hong Kong Parkview jumped 25 cents to $3.825 following the announcement that China Petrochemical Corp (Sinopec) and China National Chemicals Import and Export Corp (Sinochem) would pay $253.65 million for a 20 per cent stake in the group.

Shougang Concord International Enterprises fell 20 cents to $5.15 following the news that its major shareholders Cheung Kong and CEF Holdings had placed out 223 million shares in the company, representing 17.91 per cent of the group's existing share capital.

The consortium now holds 52.71 per cent of Shougang.