Hong Kong shares sharply higher in rebound; Country Garden makes strong debut

Hong Kong shares sharply higher in rebound; Country Garden makes strong debut

	Published : Fri, 20 Apr 2007 04:30 By : Agencies Print this Story

HONG KONG (XFN-ASIA) - Share prices were sharply higher in early trade in a rebound after yesterday's sharp drop, with investors hoping that China will take a measured approach as it tries to cool down its economy and ensure a soft landing, dealers said.

China is widely expected to adopt further macro-economic tightening measures after first-quarter gross domestic product growth and March inflation came in stronger than expected.

Mainland property developer Country Garden Holdings was in focus as it posted sharp gains on its trading debut.

At 10.50 am, the Hang Seng Index was up 219.18 points or 1.08 pct at 20,518.89, off a low of 20,474.31 and high of 20,530.47.

Turnover was 17.16 bln hkd.

'Most of the bad news about prospects of an imminent interest rate increase in the mainland has already been factored in and this explains the rebound today,' said Eugene Law, head of research at Celestial Asia Securities Holdings.

'Selling pressure was not strong because most investors expect he Chinese government to take a measured approach in cooling down the economy,' he said.

Law noted market talk that Chinese authorities might raise interest rates by as much as 54 basis points as early as after market close today or during this weekend.

'Most people expect the Chinese government to try and cool down overheating in some sectors of the economy using a step-by-step approach. An interest rate increase might soon be followed by a further increase in the reserve requirements of banks to try and soak up excess liquidity,' he said.

Alex Wong, asset management manager at Ample Capital, said 'it's understandable to see the market rebound after falling sharply. However, scores of investors remain cautious over the timing and extent of tightening measures that the Chinese government might adopt soon.'.

Large-caps rebounded from yesterday's fall, with China Mobile gaining 1.10 hkd or 1.52 pct at 73.65 and HSBC rising 0.60 hkd or 0.42 pct to 143.80.

Other local banks were also higher, with Hang Seng Bank up 0.80 hkd or 0.72 pct at 111.50, Bank of East Asia up 0.85 hkd or 1.82 pct at 47.55 and BOC Hong Kong up 0.22 hkd or 1.15 pct at 19.32.

Among other blue chips, Hutchison Whampoa was up 0.35 hkd or 0.47 pct at 75.60, Swire Pacific up 0.40 hkd or 0.44 pct at 90.60 and Cheung Kong up 1.30 hkd or 1.29 pct at 102.10.

In China financials, China Life gained 0.40 hkd or 1.65 pct at 24.70, China Construction Bank up 0.06 hkd or 1.26 pct at 4.84, Bank of Communications up 0.04 hkd or 0.48 pct at 8.45 and Bank of China up 0.03 hkd or 0.76 pct at 3.99.

Mainland property firms were mostly higher despite speculation that the sector may be among those that may be hit by the Chinese government's expected credit-tightening measures.

Agile Property was up 0.15 hkd or 1.86 pct at 8.23, R&F Properties up 0.76 hkd or 4.05 pct at 19.54 and China Overseas Land up 0.21 hkd or 2.12 pct at 10.10.

Dealers said the strong debut of Country Graden helped boost the sector.

Country Garden was at 7.24 hkd, up 34.5 pct from its initial public offering (IPO) price of 5.38 hkd. It opened trade at 7.0 and hit a high of 7.27.

Among local property stocks, Henderson Land was up 0.20 hkd or 0.43 pct at 47.20, Sun Hung Kai up 0.50 hkd or 0.55 pct at 91.35, Sino Land up 0.20 hkd or 1.21 pct at 16.70 and Wharf Holdings up 0.35 hkd or 1.21 pct at 29.25.

The property sector sub-index was up 257.78 points or 1.02 pct at 24,326.91.

Lenovo Group was up 0.03 hkd or 1.05 pct at 2.89 after announcing plans to lay off about 1,400 employees around the world, which is expected to generate savings of some 100 mln usd in the fiscal year ending next March.

Tsingtao Brewery surged 0.72 hkd or 5.46 pct at 13.90 after reporting a 46 pct rise in 2006 net profit to 448 mln yuan under international accounting standards.

Elsewhere, PetroChina was up 0.07 hkd or 0.79 pct at 8.97, Chalco up 0.12 hkd or 1.33 pct at 9.12 and Zijin Mining was down 0.09 hkd or 1.93 pct at 4.58.

(1 usd = 7.8 hkd)

jun.concepcion@xfn.com

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