HONG KONG (XFN-ASIA) - Share prices closed higher in a technical bounce
after the key index lost 3.9 pct in the previous two sessions, with volumes
light as investors continue to fret about high oil prices.
China banks were mostly higher after Industrial and Commercial Bank of China
(ICBC) projected over 50 pct growth in first-half earnings, while large-caps
China Mobile, HSBC and Hong Kong Exchanges and Clearing (HKEx) drew some
bargain-hunting.
Oil refiners China Petroleum & Chemical Corp (Sinopec) and PetroChina
rebounded after recent losses driven by soaring crude oil prices, while oil
producer CNOOC was down on profit-taking.
Ping An Insurance gained nearly 3.8 pct after losing more than 15 pct over
the last two days amid worries over a tax inspection and the company's
investment in Fortis NV.
The Hang Seng index closed up 181.04 points or 0.85 pct at 21,423.82, off a
low of 21,344.85 and high of 21,534.05.
For the week, the index is down 619 points or 2.8 pct.
Turnover was low today at 50.16 bln hkd.
"Today's gains were due to a technical rebound after our market was oversold
and lost over 800 points over the previous two trading sessions," said Patrick
Yiu, associate director at CASH Asset Management.
"Bargain-hunters were selective as they picked up mainly blue chips,
including China Mobile and HSBC," he said.
Yiu also noted that China banks were helped by ICBC's earnings guidance.
"I expect most Chinese banks to report strong first-half earnings because of
healthy net interest margin (NIM) during the period and a lower tax rate of 25
pct against over 30 pct during the same period last year," he said.
"However, the second half will be more challenging because (NIM) won't be as
good as in the first half."
Yiu said the market lacked strong direction "with the US market closed
tonight for a public holiday and no fresh catalysts out there which can sustain
recovery."
Sean Tsang, senior vice president at Polaris Securities, said that while the
market rebounded from two days of losses, the recovery was far from significant
and may give way to more weakness in the near term.
"Trade was sluggish and this was reflected in the thin volume," he said.
"Many investors still lack confidence, especially in the absence of fresh
catalysts that can drive up the market," he said.
"Fund managers still disagree on where a bottom is for the market. We may
see more downside as reflected by yesterday's panic selling of China
financials," he said.
ICBC gained 0.10 hkd or 2 pct at 5.11 after it said its first-half net
profit is expected to have risen by over 50 pct year-on-year as its "various
businesses experienced positive trends."
China's largest bank said its net interest income and net fee and commission
income recorded rapid growth in the six months.
The bank posted a net profit of 40.844 bln yuan in the first half of 2007
under Chinese accounting standards. ICBC will release its audited first half
financial results on Aug 22.
Among other China banks, Bank of Communications rose 0.09 hkd or 1.05 pct to
8.66, China Merchants Bank was up 0.45 hkd or 2.01 pct at 22.85 and China
Construction Bank added 0.08 hkd or 1.37 pct at 5.92.
Large-caps were higher, with China Mobile rising 2.0 hkd or 1.96 pct to
103.80, HSBC up 1.0 hkd or 0.85 pct at 118.60 and HKEx rising 2.10 hkd or 2 pct
to 107.10.
In the oil sector, refiner Sinopec gained 0.19 hkd or 2.78 pct at 7.03 and
PetroChina rose 0.12 hkd or 1.26 pct to 9.67 after recent losses on soaring
crude oil prices.
Oil producer CNOOC fell 0.24 hkd or 1.78 pct to 13.26 even as crude oil
hovers above 145 usd a barrel.
Some dealers attributed CNOOC's fall to speculation that Beijing will
announce new resources tax measures during the weekend.
Ping An was up 1.85 hkd or 3.78 pct at 50.75 after tumbling 15.7 pct over
the last two days amid worries over a tax inspection and the company's
investment in Fortis NV.
The Chinese insurer said it does not need to make provisions for its
investment in Belgian-Dutch banking and insurance group Fortis NV.
China Life was up 0.15 hkd or 0.59 pct at 25.55.
China airlines were mixed as weekend direct charter flights between Taiwan
and the mainland kicked off today.
China Southern Airlines was down 0.02 hkd or 0.68 pct at 2.90, China Eastern
Airlines gained 0.03 hkd or 1.36 pct at 2.23 and Air China was unchanged at 3.55
hkd.
Cathay Pacific gained 0.14 hkd or 1.01 pct at 13.98, rebounding from a 6.9
pct fall over the past two days after a profit-warning earlier this week due to
high jet fuel costs.
Local property firms were mixed, with Cheung Kong up 0.50 hkd or 0.49 pct at
102.90, Sun Hung Kai Properties up 1.90 hkd or 1.84 pct at 104.90, Henderson
Land down 0.45 hkd or 0.97 pct at 46.05 and Sino Land down 0.22 hkd or 1.52 pct
at 14.28.
Exporter Li & Fung was up 0.80 hkd or 3.6 pct at 23 on bargain-hunting.
China telecom firms were mostly higher, with China Netcom surging 0.85 hkd
or 3.96 pct at 22.30 and China Unicom gaining 0.30 hkd or 2.05 pct at 14.94
while China Telecom was down 0.10 hkd or 2.49 pct at 3.92.
Coal stocks were sharply lower amid speculation that Chinese authorities
might raise resources tax as early as this weekend.
Yanzhou Coal dropped 0.66 hkd or 4.68 pct to 13.44, China Coal fell 0.26 hkd
or 2.04 pct to 12.50and China Shenhua was down 0.10 hkd or 0.35 pct at 28.30.
New listing China Shanshui Cement ended at 3.0 hkd, up from the IPO of 2.8
hkd.
Solomon Systech was down 0.045 hkd or 12.16 pct at 0.45 after the company
warned of a net loss in the first half to June.
The China Enterprises index was up 85.26 points or 0.77 pct at 11,225.18.
Dealers predict trade to remain volatile next week, with the market
susceptible to more selling pressure.
"Investor confidence remains poor, oil prices remain on an uptrend and Wall
Street is on a downtrend," said Polaris Securities' Tsang.
"Given this negative backdrop, I can't see much chance for our market to
sustain the gains that were achieved today," he said.
"Near term, I won't be surprised to see our market fall another 5 pct," he
said.
CASH Asset Management's Yiu echoed Tsang's bearish view.
"Record high oil prices are increasingly having a negative impact on the
global economy and equity markets," he said.
"With many taking a view that Wall Street is poised to go down some more
amid slowing corporate earnings, it will inevitably exert bearish pressures on
global markets, including Hong Kong," Yiu said.
(1 usd = 7.8 hkd)
jun.concepcion@xfn.com
jc/rc
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