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Carrie Lee

STOCKS of property developers took a beating yesterday as rumours quickly spread that Hong Kong's big banks were planning to tighten the screw on mortgage lending further.

  The Hang Seng property sub-index shed 1.83 per cent yesterday and further modest falls could come when the market re-opens on Monday after the Hongkong Bank and Hang Seng Bank last night confirmed market fears.

  The Hang Seng Index fell 92.59 points to 11,377.83 yesterday on speculation of a lowering of the mortgage ceiling.

  There were 1.67 billion of shares traded worth of $7.98 billion.

  News of the afternoon press conferences called by the HSBC group banks - the Hongkong Bank and the Hang Seng Bank - fuelled speculation of a lending ceiling cut throughout the day.

  ''It's a combination of rumours of a mortgage ceiling reduction and rumours of a rising mortgage rate [which caused the fall],'' said Baring Securities director James Osborn.

  But the fall was gentle as the mortgage rumours had dogged the market for some time and had been discounted to a certain extent, brokers said.

  They also said the moves would benefit the local economy in the long term, and did not affect market fundamentals.

  ''The market conditions were not bad, except that investors' interest was somewhat weakened by the concerns over the mortgage issue,'' said PBI Securities sales director Ivan Leung.

  ''It affected the market just psychologically, not fundamentally.''   Brokers also attributed yesterday's market fall to other factors.

  Investors disappointed by the lack of signs of any pre-Lunar New Year rally - for which they had been waiting expectantly - had also started to sell, said Mr Osborn.

  ''Speculators grasp the chance to engage in speculative activities. At some investment houses, programmed selling is turned on when the index is between 11,600 and 11,200,'' said Mr Leung.

  ''And investors often don't want to hold on to too many stocks on Friday.''     Overall, the market has been wobbly in the period of consolidation since new records were set.

  ''It just reflects there isn't a clear trend at the end of the day,'' said Barclays de Zoete Wedd assistant director Nial Gooding.

  ''The market is still very much waiting to be led.'' He said trading was increasingly dominated by local investors.

  ''Now we need to consider what the local view is [when explaining and predicting the market movement],'' he said.

  Selective bargain-hunting had also added selling pressure in the morning, said Mr Gooding.

  Crosby Securities dealing director Willie Chau Wing-hung said: ''It was a roller-coaster market, with some bounce towards the end.''   The market opened with the index at around 11,564, sprinting close to 11,650 almost right away, supported by the strength in overnight trading in London.

  The index then lost momentum, easing to the day's low of 11,297.77 as the lunch bell rang.

  In the afternoon, it regained about 170 points to take it to 11,467.75 at 3 pm, with bargain-hunters moving in.

  There the index met resistance to slip down before the close.

  Finance lost 0.61 per cent, 61.3 points, to 9,971.32, and utilities 0.43 per cent, 52.66 points, to 12,087.57. Commercial and industrial stocks shed 0.19 per cent, 16.35 points, to 8,539.1.

  Hong Kong and China Gas was the biggest percentage gainer in the top-10 active list, gaining 3.21 per cent, 70 cents, to $22.50.

  It notched up the day's fifth highest turnover of $262.41 million as 11.72 million shares were traded.

  United States investment bank Merrill Lynch yesterday launched a covered warrant issue on the utility stock.

  Property counter Cheung Kong (Holdings), the day's heaviest traded in turnover terms, dipped $1.50 to $47.50.



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Hang Seng Index

Property takes a beating on mortgage news