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SCMP Reporter

Warrant trading in regulator's sights amid suggestions that it may have exacerbated last week's stock slump

Leading stocks clawed back nearly half of last week's losses yesterday, including a sharp rally by China Mobile, but shrinking market turnover indicated a lack of support for further gains.

Reversing a two-day 410-point decline at the end of  last week's trading, the Hang Seng Index surged  180.02 points, or 1.2 per cent, to 15,218.63 yesterday.

Turnover fell to $18.46 billion from $26.27 billion on Friday.

'Higher new mobile-phone user numbers from China Mobile were used as an excuse to push the market up. However, lower trading volume means the index may consolidate between 15,000 and 15,300 in the short term,' said Ben Kwong Man-bun, a director at KGI Asia Securities.

China Mobile, the country's largest mobile-phone service provider, was the biggest gainer on the index yesterday.

The counter rallied 3.71 per cent to $34.95, contributing 43.6 per cent of yesterday's index gain.

The company reported that it had added 3.58 million users last month after having gained 3.28 million users in June.

Hutchison Whampoa and Cheung Kong, which will announce interim results on Thursday, saw heavy buying yesterday. Hutchison rose 1.28 per cent to close at $79.15 and Cheung Kong added 0.47 per cent to reach $85.

Kenny Tang Sing-hing, an associate director at Tung Tai Securities, said better than expected interim results from both companies  might help the benchmark index break through the resistance level of 15,300 points.

Oil stocks generally rebounded following an increase in oil prices. CNOOC surged 3.64 per cent to $5.70 and Sinopec jumped 3.62 per cent to $3.575.

Boosted by Sinopec, the H-share index added  49.81 points, or 0.96 per cent, to 5,250.56.

PetroChina was the only large oil stock  to close without making an advance, remaining unchanged at $6.30 in heavy trade.

Brokers said the counter was still  depressed by the rumours that the company might place new shares and that its most famous strategic investor, Warren Buffett, might sell his shares.

JP Morgan said in a report that CNOOC was its preferred pick in the mainland oil sector. It expects CNOOC to post stronger sequential first-half earnings growth, which could become a share price catalyst, but anticipates weak  growth at PetroChina because of refining losses.

Ping An Insurance, which reported forecast-beating interim profit growth of 49 per cent, to 2.24 billion yuan, gained 1.87 per cent, to $13.65.

This stimulated other  insurance stocks, with PICC Property and Casualty surging 3.02 per cent to $2.05, and China Life rising 1.63 per cent to $6.25.

Yanzhou Coal, which announced a 54 per cent increase in half-year profit to 1.88 billion yuan, dropped 0.8 per cent to $6.20.

Dao Heng Securities downgraded the stock from buy to hold on concerns over declining sales volumes and rising costs.

Bank of Communications finished higher after two successive days of losses, adding 1.49 per cent to close at $3.40. After the market closed, the country's fifth-largest lender said it had returned to profit in the first six months, with a net profit of 4.6 billion yuan.

BOC   rose 0.96 per cent to $15.85. HSBC gained 0.63 per cent to $126.90 and subsidiary Hang Seng Bank fell 1.03 per cent to $106.20.

Most index property stocks ended the day higher.

Hang Lung Properties gained 1.22 per cent to $12.40. Sino Land added 1.13 per cent to $8.95. Sun Hung Kai Properties edged up 0.31 per cent to $80.65.

Warrant trading has been blamed for intensifying last week's market slump. Peter Au-Yang, an executive director and chief operating officer at the Securities and Futures Commission, said yesterday that the regulator would review the existing operation of the warrant market but did not provide any timetable.



China Mobile leads rally as major stocks recover