HSI edges closer to 11,000

The Hang Seng Index edged closer to the 11,000-point level yesterday, bolstered by heavy speculative interest in Hutchison Whampoa.

The blue-chip index closed up 74.39 points, or 0.68 per cent, at 10,911.25 on a turnover of $4.74 billion.

'People are just taking a pause and seeing where they should go,' said Philip Mok, SG Securities' head of Greater China research.

The index has gained almost 20 per cent since early last month.

Analysts expect the indicator to go higher in the near term, but they are cautious about the long-term prospects.

'I don't think it is a problem [for the Hang Seng Index] to break 11,000, but it is whether it can be sustained,' said Adrian Ngan, BNP Prime Peregrine's head of Hong Kong research.

Analysts said a breach of 11,000 points by the index would be more likely if the Dow Jones Industrial Average first cracked the 10,000-point barrier, which it did briefly in early trade yesterday.

On Monday, the Dow rose 0.83 per cent to a record 9,958.77 points.

Some analysts, however, were concerned that the Dow was set for a fall.

'If the Dow goes through 10,000 - and subsequent to that there is strong profit-taking - that would affect us,' said James So, Asia Financial Securities' director of research.

Interest continued to focus on Hutchison, which denied rumours that it had bought shares in Cable & Wireless, the British parent of Hongkong Telecom.

Hutchison rose 1.2 per cent to $63.25, as the market continued to believe that it soon would make a corporate acquisition, brokers said.

'People will continue to speculate until they buy something,' a broker said.

Retailers and hoteliers made some gains.

Shangri-La closed 5.14 per cent stronger at $7.15, while Hongkong and Shanghai Hotels ended 3.8 per cent firmer at $5.45.

Esprit finished 11.42 per cent higher at $3.90.

'For hotel stocks and retailers, people are looking for a recovery story,' Mr Mok said.

'Most people feel we have seen the bottom of the economic cycle.' China Telecom dropped 1.76 per cent to close at $13.95 after Premier Zhu Rongji announced that he intended to further open the mainland's telecommunications market.

Mr Zhu also said recent price cuts in telephone calls were not enough.

Cathay Pacific fell 3.12 per cent to $9.30, hit by plans to cut the wages of pilots in exchange for stock options.

Hysan Development was unchanged at $10.75, despite the property company posting worse than expected annual results.

The red-chip index rose 1.03 per cent to 760.69 points. Chu Kong Shipping led the way with an 8.47 per cent increase to 64 cents.

Hang Fung Gold Technology closed at 95 cents on its first day of trading, a gain of five cents on its listing price.