Bank counters feed further index gains

INVESTOR appetite for bank stocks was the main factor behind yesterday's 16.16-point rise in the Hang Seng Index, with most other large stocks holding steady or slipping slightly.

There was also strong demand for Swire Pacific A shares, apparently on hopes of an end to the strike at associate Cathay Pacific. Many analysts have been telling their clients to switch to Swire from Cathay.

Swire Pacific A was the best performing share in the Hang Seng Index.

The index closed at 5,939.89 on volume of $2.03 billion.

The market closed before the mainland attack on Secretary for Economic Services Anson Chan over the awarding of the contract for Container Terminal 9.

HSBC Holdings added 50 cents to $62.50, while Bank of East Asia added 75 cents to $36 and Hang Seng Bank added $1 to $58.50.

''People are not that comfortable with the level of the index so they are buying the more defensive stocks like the banking stocks,'' said Mr K.S. Ng, assistant director at Barclays de Zoete Wedd Securities.

Some investors took profits after the strong performance in December and early January, causing the index to dip during morning trade, although it never broke through the 5,900 barrier. The day's low of 5,902.25 came at about 11 am.

The index recovered by the lunch close to end the morning at 5,952.32, up 28.59 points from the previous close.

The high for the day, 5,959.83, came shortly after lunch, before the index slipped again, giving up some of its earlier gains.

On the futures exchange, the January index contract cut its discount to the spot index, rising 53 points to 5,933. The February contract closed at 5,915, up 47 on the day and a 24.89-point discount to the spot index.

The good performance by banks pushed the finance sector up 70.56 points to 5,719.12.

Also in demand was China Light and Power, seen as a safe stock with good growth potential, which added 75 cents to $35.50.

Property shares continued to be out of favour, with the property index falling 82.53 points to 8,855.3.

Yee Hing, the controlling shareholder in Stelux Holdings, has told the exchange it has increased its stake in the company by 3.3 per cent to 51.3 per cent.

Speculators ignored last week's statement by Laws Property saying that discussions for a change of control were not proceeding, and started buying shares.

The company had the biggest gain of the day at 11.1 per cent to $2.225, a rise of 22.5 cents or 10.2 per cent.

Ong Holdings, another of last week's speculator favourites which has announced that takeover talks are not proceeding, added 8.4 per cent to $1.67, a rise of 13 cents or 8.4 per cent.