bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

urlAlias

moreOnThisArticles

sponsorType

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

Investors sell before seeing key economic data from US, worried economic recovery may be slowing

United States chip giant Intel Corp's downward revision on its third-quarter earning forecasts  offered a convenient excuse for investors to take profits in Hong Kong yesterday.

So too did the pending release of key US economic data last night, which some felt might offer yet another unwelcome indication of a weakening in the US economic recovery.

Hang Seng Index yesterday  lingered near the 13,000-point level for most of the day. The blue-chip index edged up as much as 75.78 points to an intraday high 13,074.85 at mid-morning but a futures-led sell-off and profit taking dragged the index back to below 13,000.

The index finished 50.97 points or 0.39 per cent lower at 12,948.1. Turnover fell by $983.06 million from Thursday to $13.63 billion.

Technology-related counters in Hong Kong and the region as a whole were under pressure yesterday amid concerns over faltering demand for semiconductors after Intel cut earnings forecasts.

'It was a  consolidation after recent rally,' Daiwa SB Investment director and chief investment officer Ambrose Chang said.

'The market was simply reacting to the Intel-prompted sell-off in tech-heavy markets like Japan, Taiwan and South Korea.'

Chip machinery maker ASM Pacific Technology shed 1 per cent to close at $26.10 while Wuxi-based chip maker CSMC Technologies fell 3.84 per cent to 50 cents.

The mainland's largest chipmaker, Semiconductor Manufacturing International,  traded at between $1.57 and $1.59 - about 3 per cent lower than Thursday -  for most of the day but rebounded dramatically  in the last few minutes of trade to close unchanged at $1.63.

Last night's scheduled release of key US economic data, including last month's unemployment rate and payroll figures,  also  deterred investors from taking big bets, Core Pacific-Yamaichi International research head Alex Tang Yee-yuk said.

'Investors are being cautious. They didn't want to do anything ahead of the economic data release,' Mr Tang said.

Fund rebalancing activities before Monday's Hang Seng Index reshuffle also contributed to the declines. Of the 33 index constituents, 24 saw price declines but just four showed gains.

Index dropout Shanghai Industrial  was the biggest loser, falling 4.17 per cent to close at $13.80. Television Broadcasts, which will also leave the benchmark on Monday after a 19-year sojourn,  dropped 2.76 per cent to close at $31.70.

Index newcomers China Merchants and Denway Motors, by contrast, each gained before market close, finishing 0.41 per cent higher at $12.10 and 1.61 per cent stronger at $3.15, respectively.

Despite the falls over the past two days, the Hang Seng Index finished the week with a gain of 129.68 points, following a 441.52-point advance in the previous week.

Market watchers remain upbeat  on the market outlook.

'There's an ample supply of funds in the market waiting for buying opportunities. Investors are just waiting for the right theme,' UOB Kay Hian Hong Kong director Steven Leung Wai-yuen said.

With analysts and economists revising Hong Kong economic growth upwards, Mr Leung believed the Hong Kong stock market would also edge higher.

JP Morgan, in a market strategy report yesterday, said Hong Kong's economic recovery was well under way and forecast aggregate corporate profit growth of 24 per cent this year and 14 per cent next year.

Corporate profitability should surpass the record levels of 1997, the report said.

'Fundamental risks are at the lowest level in over a decade. Banks are flush with cash and retail equity participation should increase.

'The market's current [price-earnings ratio] of 13.7 times is attractive,' the report said. 'Rising in line with earnings growth would push the market up 15 per cent to 14,800 [points within 12 months].'

JP Morgan favours reflation plays such as  Sino Land, Great Eagle and Swire.



Intel brings a negative finish to strong week