Investors shrug off advance on Wall Street

THE stock market drifted down yesterday as the absence of any important news led profit-takers to cash in on Wednesday's gain.

The Hang Seng Index dropped 102.77 points to end at 9,262, a loss of 1.09 per cent.

Turnover was subdued at $2.38 billion, down from a revised $3.72 billion for Wednesday.

Volume was sluggish across all areas in a general markdown with only isolated stocks showing any significant movement.

Brokers said the day was essentially featureless, with the market slowing in advance of the forthcoming long weekend.

'It's been slow and quiet all day,' said Nial Gooding, director of Kleinwort Benson. 'A career in the Hong Kong stock market is an ideal way to cure insomnia.' HKR International, which goes ex-dividend today, rose against the trend.

Hopewell led the decline in property stocks, and HSBC, which announced it was buying Hang Seng Bank shares, was also down sharply.

Brokers had expected shares to rise early after the surge on Wall Street overnight, but after 30 minutes the index was down 35 points to 9,330.

It was apparently taking its lead from London, where there had been little interest from foreign buyers.

The index rallied slightly in the mid-morning, rising to 9,310 from 9,280 before falling again to reach 9,292.74 at the morning close.

It held its own immediately after lunch before falling again to post the day's low of 9,252.46 before rallying fractionally to close at 9,262.

Some brokers blamed the day's falls on concern that corporate earnings growth would slow.

They said poor consumer sales, rising unemployment and weak property markets were again starting to sap the confidence of the market and temper the optimism that interest rates would fall.

Mr Gooding disagreed. He said domestic fundamentals were increasingly positive and the falls were on account of profit-taking in the absence of major news.

'The market is sitting on the fence,' he said, 'with no factors internally or externally to push it one way or the other.' He said volumes were too low to read anything important into the fall.

'Turnover was pathetic. When turnover is down at this level it is no better than white noise.' Bobby Ho, dealing manager of GK Goh Securities, said the fall was simply the market taking a breather after the previous rise.

'Today it's back to normal,' he said. 'Profit-takings were the main factor behind the fall. Stocks fell across the board because there was basically no news.' One of the counters providing some relief was HKR, which defied the falls by rising 10 cents to $6.95.

This was motivated by the fact it is going ex-dividend today, having announced last month it would share some of the profits it has made on property sales.

One of the major falls of the day was made by Hopewell, which ended the day at $6.60, down 15 cents or 2.2 per cent, the second biggest decline among Hang Seng Index constituent stocks.

Subsidiary Consolidated Electric Power Asia, was on Wednesday disqualified from bidding to build a power station in the Philippines by the country's state-owned National Power Corp. CEPA fell 45 cents to $18.15.

The fall in Hopewell was mirrored by declines in most property stocks.

Hysan Development fell 40 cents to $18.15, New World Development 45 cents to $24.45, Sun Hung Kai Properties 75 cents to $57.25 and Cheung Kong 40 cents to $38.40.

The property sub-index fell 175.22 points to 15,772.64 to show a loss of 1.1 per cent.

Finance stocks were also hit hard, with the finance sub-index losing 116.73 points, or 1.37 per cent, to 8,402.24.

HSBC fell $1.50 to close at $101. Subsidiary Hang Seng Bank fell 75 cents to $57.75.

The falls for the two banks came amidst the announcement HSBC was buying 500,000 shares in Hang Seng Bank, its first purchase since 1982.

One stock that held its own was Hongkong Telecom which closed unchanged at $15.55. At one stage it had risen to $15.65.

Brokers said the market would remain quiet today ahead of the long weekend but some were confident the medium term would see the market rise. The market is closed on Monday for a holiday.