A sharp fall in trading volumes suggests players are sidelined, awaiting fresh leads Hong Kong stocks finished 0.11 per cent higher yesterday, ending a three-day losing streak, but market participants said the mood in the market was little changed compared with the previous session. CNOOC and China Telecom were the centre of attention following acquisition news, while the buying of second-tier banks also helped prop up the Hang Seng Index. A sharp decline in trading volumes, however, indicated that many investors were staying away from the market, while awaiting fresh news to give sentiment a renewed boost. 'The market is still absorbing Thursday's downturn,' said Matthew Long, the head of equity derivatives sales at Macquarie Bank. 'You are going to see some reasonable day-to-day movements, but after such a significant fall it will take a little while to recover.' Last Thursday, the Hang Seng Index fell 501.45 points in its worst decline since the September 11 terrorist attacks in the United States. In the two sessions since Thursday the index has remained range-bound due a combination of further profit taking and a hunt for bargains. Yesterday, the index traded in a range of between 11,678.2 and 11,803.2 before finishing 13.35 points higher at 11,749.72. Analysts said the expiry of the October Hang Seng Index futures contract on Thursday had been adding to the uncertainty. 'A lot of the attention is also on the upcoming initial public offerings,' said Ben Kwong, an associate director with KGI Asia, noting that some investors had been switching funds into the new stocks. Mainland insurance company PICC Property & Casualty started selling shares to Hong Kong retail investors yesterday, while minibus and helicopter maker AviChina Industry & Technology priced its offer at the top end of the price range over the weekend. AviChina will start trading on Thursday, while PICC's debut is scheduled for November 6. CNOOC was the top blue-chip performer with a 4.39 per cent gain to $14.25 on news it will pay about US$275 million for a 12.5 per cent stake in Australia's Gorgon gas field. BOC Hong Kong added 3.51 per cent to HK$13.25, Bank of East Asia rose 2.96 per cent to $22.60 and Hang Seng Bank gained 1.57 per cent to $97, suggesting investors are still expecting a recovery in the economy and the property market. Property shares fared less well, after a Hong Kong newspaper reported that weekend sales of new flats had slowed to their lowest level in two months. Sun Hung Kai Properties fell 1.53 per cent to $64, Henderson Land dropped 1.24 per cent to $31.80 and Wharf gave up 0.25 per cent to $19.60. However, a lot of the action yesterday was focused on stocks outside the Hang Seng Index, especially China Telecom. The mainland fixed-line carrier jumped 4.25 per cent to $2.45 after giving details on the acquisition of six provincial networks from its parent which will provide a significant boost to earnings per share. The H-share sector continued to be driven by strong third-quarter earnings. The latest to benefit were Sinopec Yizheng Chemical Fibre, China's largest polyester maker, which jumped 6.25 per cent to $1.70, and ethylene producer Sinopec Shanghai Petrochemical, which added 3.75 per cent to $2.075. KEY FIGURES Close: 11,749.72 (+13.35) Turnover: $10.86 bln Volume: 9.22 bln shares Day's high: 11,803.18 Day's low: 11,678.20 Advanced: 509 Declined: 327 Unchanged: 508 Oct futures: 11,745 (+35) Nov futures: 11,695 (+34)
