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SCMP Reporter

The capture of Saddam and Great Wall's trade debut are not enough to stop investors from cashing out their profits

The market opened at a new year high of more than 12,700 points yesterday on positive sentiment following the capture of Saddam Hussein and high hopes for Great Wall Automobile's debut, but news of two share placements, including a massive one in BOC Hong Kong, sent prices gradually lower.

By the end of the day, the Hang Seng Index had declined 0.59 per cent to 12,520.17 points, having underperformed all the other major equity markets in the region.

Turnover remained heavy at $17.77 billion  as investors took the opportunity to cash out hefty profits accumulated in recent months.

'It may not be a bad idea to take some shine off the market as it was getting a bit too speculative,' the head of equity sales at one investment bank said.

He noted that the  market was already trading at fair values and the last leg of the upward trend had been mainly liquidity-driven.

Great Wall  failed to copy the 50 per cent gain achieved by PICC Property and Casualty on its first day of trading, despite massive demand for the initial public offering (IPO). After opening 65.41 per cent higher at $22, Great Wall fell back to close at $17.05 - 28.19 per cent above the IPO price.

'It was a bit of a disappointment, but then again there were a lot of placements hurting sentiment,' said Steve Hon, a broker with Emperor Securities.

Profit taking was strongest in China-related stocks, especially in the core constituents of the H-share index, which had risen  124 per cent this year before losing 3.87 per cent yesterday.

The red-chip index fell 2.39 per cent on the day.

Oil producers were among the top losers after the capture of former Iraqi leader Saddam increased the possibility that  Iraq would resume oil exports, which would put downward pressure on prices.

China's largest offshore oil producer CNOOC fell 6.26 per cent to end at $16.45, PetroChina dropped 4.22 per cent to $3.40 and Sinopec finished 4.34 per cent lower at $2.75.

Blue-chip stocks suffered relatively less as most people were expecting next year  to be another good one  for Hong Kong equities, said Joseph Lau, a director with Tai Fook Asset Management.

Mr Lau projected the Hang Seng Index would  add a further 10 to 15 per cent by the middle of next year.

Bank of East Asia fell 3.77 per cent to HK$24.25, hurt by a US$1.89 billion placement of shares by BOCHK's parent.

BOCHK shares were placed at HK$13.70 each, or a 12.2 per cent discount to the latest closing price, which analysts considered large but reasonable given the huge size. Trading in BOCHK was suspended.

At Oriental Press, the controlling shareholder sold 5 per cent of its stake in the publisher of two of Hong Kong's top three Chinese-language newspapers to raise  $306 million.

The placements put pressure on the market, with investors worrying that more would be coming as firms tried to take advantage of the strong gains in share prices, which could soak up some of the liquidity in the market, said Kingston Lee, the head of Hong Kong and China research at ING Financial Markets.

HSBC finished unchanged at $119.50 as its position as a global bank enabled it to benefit from expectations that Saddam's capture would give a positive boost to the United States economy.

KEY FIGURES

Close: 12,520.17 (-74.25)

Turnover: $17.77 bln

Volume: 11.12 bln shares

Day's high:  12,740.50

Day's low: 12,504.29

Advanced: 273

Declined: 668

Unchanged: 504

Dec futures: 12,540 (-90)

Jan futures: 12,543 (-89)



Early rally loses steam as placements trip bulls