Market hits new high as frantic buying continues
FOREIGN investors' growing hunger for Hong Kong stocks catapulted the Hang Seng Index to another record high yesterday in frantic trading.
The index leaped 300 points, or 3.22 per cent, to close at 9,629 on a torrent of Japanese and North American money seeking out Hong Kong blue chip stocks.
Yesterday's close is the second record in consecutive days of trading. It is the fourth largest leap in a day.
For the year so far, the index has risen 74 per cent, making it one of the best performers in the world.
Turnover chalked up a staggering $10.3 billion, the second highest in the history of the exchange.
Brokers linked the market's bullishness to other buoyant markets in the region.
But they did not expect the index to smash through the 10,000 point barrier today, despite the gains.
''They were buying across the board from the United States, Japan, the United Kingdom, Hong Kong,'' said Baring Securities assistant director James Slade.
Locally, retail investors also moved in, he added.
Investors were taking the easing of the Chinese austerity plan to mean that the local stock market would prosper, he said.
Brokers were stretched as the frenzied buying spree gathered pace in the day.
There was not much volume in early trading, but once the market had stabilised by 10.45 am at around 9,650 with no major selling in sight, the floodgates opened and trading swelled the exchange floor settlement and clearing system.
''It's very difficult to cope. I was terribly busy all day and had no time to rest,'' said Crosby Securities dealing director Willie Chau Wing-hung, even though it was already two hours after the market close.
Brokers could not afford to leave the telephone for a moment, he said.
Brokers spoke of non-stop calls between the buying and selling sides jamming up the telephone system and making communication with the outside world impossible at times.
They experienced even greater strain as the busy trading coincided with the introduction of a new screen of trading information.
The new format is part of a phased programme introducing fully automated computer-driven trading.
When the market closed at 3.30 pm, some dealers were disappointed that the session had to end.
''I think everybody wanted to go on buying and selling,'' said Morgan Grenfell sales director David Lavington.
The performance surpassed the expectations of most brokers, who had already anticipated a bullish market this week.
''We'd predicted it would go up, but not this much,'' said DBS dealing director Teresa Wong Shue-yung.
Dealers expected frenzied buying to continue.
''Buyers are still rushing in like mad. The buying pressure will be strong,'' she said.
Lehman Brothers' head of research, Kirk Sweeney, said: ''We think the market is still very active. We believe that the earnings growth will support the index.'' But Mr Lavington said that with 380 points still to go, the index was unlikely to smash through the 10,000 mark yet. That would probably happen tomorrow.
He associated the bullish performance with the buoyancy in the Bangkok and Singapore bourses.
''Asian markets are receiving a lot of interest,'' he said.
Mr Sweeney said: ''The real noose was actually in Singapore because of Singapore Telecom.'' While brokers expected the market to stay buoyant in the short term, they looked forward to a consolidation.
''We don't want to keep going up. We hope to see some ups and downs in the market,'' Ms Wong said.
Mr Slade said the sentiments were so positive as to dominate over political news.
''It's positive, the market will react. If it's negative, the market will just ignore it,'' he said.
Governor Chris Patten said the booming stock market reflected the ''reality'' in the territory.
It would be surprising if Hong Kong, with its economic successes, did not attract international investors, he said.
''I think that outside investors reckon that the market here was underpriced. But it was much more exciting in the market than some other places. So it was not surprising that they are investing here,'' said Mr Patten.
Referring to the Sino-British row over political development, Mr Patten said: ''Literally, the unique concept of 'one country, two systems' isn't easy, and it would be surprising if it didn't involve one or two hiccups from time to time.'' Noting the unpredictability of the stock market, Mr Patten added: ''Like every other market, this one will go up and down. But this one, I think, will always, over a period, reflect the huge strength of this community and its economy.''