Hong Kong shares end morning lower on Fed caution; commodities support

Hong Kong shares end morning lower on Fed caution; commodities support - UPDATE

	Published : Tue, 18 Sep 2007 07:09 By : Agencies Print this Story

HONG KONG (XFN-ASIA) - Share prices finished the morning session lower as several investors moved to the sidelines ahead of the US Federal Reserve's interest rate decision tonight.

A weak showing of Wall Street overnight and troubles at UK mortgage lender Northern Rock also weighed on investors' minds.

Property stocks saw continued profit-taking after recent gains, but strong commodity prices lifted oil, metals and mining counters and helped limit the market's downside.

The Hang Seng Index ended the morning down 68.08 points or 0.28 pct at 24,531.26, off a low of 24,368.65 and high of 24,570.63.

Turnover was 43.02 bln hkd.

'The market has largely priced in a 25 basis point Fed cut and this explains continued profit-taking in properties,' said Winner Lee, associate director at BNP Paribas.

'More than a rate cut, investors are keen to see what clues (Fed chairman Ben) Bernanke might give on any further rate action and the state and direction of the US economy,' she said.

Many investors remain wary about problems in the US sub-prime mortgage market, Lee said, also noting troubles at UK's Northern Rock.

The British lender sought emergency funding from the Bank of England, prompting huge withdrawals from depositors and raising fresh concerns over credit markets.

'As troubles in credit markets spread in different parts of the world, some investors have started worrying about a possible slowing of the global economy. These worries could prompt some fund managers to withdraw monies from equity markets in the region in favor of safer fixed income investments in the West,' Lee said.

She noted that turnover today was relatively light as many investors stayed on the sidelines.

Properties were hit by continued profit-taking, with the sectoral index losing 458.41 points or 1.52 pct at 29,771.26.

Cheung Kong was down 0.40 hkd or 0.33 pct at 119.50, Sun Hung Kai Properties fell 1.30 hkd or 1.12 pct to 114.30, Wharf Holdings lost 1.85 hkd or 4.82 pct at 36.55 and New World gave up 0.55 hkd or 2.61 pct at 20.50.

Henderson Land was down 2.45 hkd or 4.01 pct at 58.60 after reporting 27.5 pct drop in net profit for the year ended June due to lower revaluation gains on investment properties.

Sino Land was down 0.55 hkd or 2.68 pct at 20.0 ahead of its year to June results announcement later today.

Lee said the government land auction yesterday virtually had no impact on property counters today.

Nan Fung, Sino Land Co and two other firms secured a 238,164 square foot residential site at Tai Po in New Territories for 4.55 bln hkd in a government land auction yesterday.

The winning bid was 47.7 pct above the minimum asking price of 3.08 bln hkd.

'I'm not even sure if a Fed rate cut will stimulate interest in property counters because local banks may not necessarily follow the Fed's lead,' Lee said.

'One-month Hibor (Hong Kong interbank offered rate) is currently at a high level at 4.86 pct and this does not give lenders in the interbank market much room to earn a decent margin if they cut their rates and follow the Fed lead,' she said.

Among major blue chips, China Mobile was flat at 106.80 hkd, Hutchison Whampoa down 0.75 hkd or 0.93 pct at 80.25 and HKEx up 0.30 hkd or 0.16 pct at 188.

Banking stocks were mostly lower amid news flow on Northern Rock, with HSBC losing 0.40 hkd or 0.29 pct at 137.50, Standard Chartered down 0.20 hkd or 0.09 pct at 230.0, Bank of East Asia down 0.10 hkd or 0.24 pct at 42.35 and BOC Hong Kong down 0.14 hkd or 0.79 pct at 17.60.

Hang Seng Bank bucked the trend as it gained 0.40 hkd or 0.30 pct to 131.60.

China banks were also mostly lower, with Bank of China up 0.01 hkd or 0.26 pct at 3.85, Bank of Communications down 0.02 hkd or 0.22 pct at 8.88, China Citic Bank down 0.03 hkd or 0.53 pct at 5.68 and China Merchants Bank down 0.15 hkd or 10.52 pct at 28.70.

China Construction Bank was down 0.03 hkd or 0.44 pct at 6.84 despite news that the bank attracted a total of 2.26 trln yuan of orders for its mainland IPO.

Among insurers, China Life was flat at 38.20 hkd and Ping An up 0.35 hkd or 0.40 pct at 88.

Lee noted that the market's falls were cushioned by interest in oil and resources counters as global commodity prices continue to be firm.

Oil producers were higher after crude prices topped the 81 usd a barrel level in Asian trade today.

PetroChina was up 0.02 hkd or 0.17 pct at 11.52 and CNOOC was up 0.18 hkd or 1.74 pct at 10.50. Refiner Sinopec was down 0.14 hkd or 1.69 pct at 8.13.

Among metals and mining counters, Chalco was up 0.16 hkd or 0.85 pct at 18.98, Jiangxi Copper up 0.30 hkd or 1.65 pct at 18.44, Zijin Mining up 0.25 hkd or 2.53 pct at 10.14 and Lingbao Gold up 0.15 hkd or 2.75 pct at 5.60.

Fosun International was down 0.10 hkd or 0.77 pct at 12.86, reversing early gains following news that it posted a net profit of 826.6 mln yuan for the first half, against 415.5 mln a year earlier.

China Coal was up 0.74 hkd or 4.26 pct at 18.12 after news that it has filed an application for an A-share issue in Shanghai.

China Telecom rose 0.14 hkd or 3.12 pct at 4.63 on a report that it may buy the assets of Beijing Telecom, a wholly-owned subsidiary of China Telecom Group, for 4 bln yuan.

China Shenhua Energy was down 1.15 hkd or 2.88 pct at 38.85 despite news that the mainland's securities regulator has approved the company's A-share IPO plan.

Elsewhere, China Communications Construction was down 0.14 hkd or 0.79 pct at 17.50 and China Unicom was down 0.18 hkd or 1.31 pct at 13.56.

(1 usd = 7.8 hkd)

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Hong Kong shares end morning lower on Fed caution; commodities support - UPDATE