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Hong Kong shares close sharply lower led by China airlines, telcos, banks UPDATE
HONG KONG, Jan 12, 2009 (XFN-ASIA via COMTEX) --
Share prices closed sharply lower, with the key index
below the 14,000 level, following grim US jobs data and more earnings warnings
from locally-listed firms.
China stocks led the decline as airlines, telecom firms and banks took a
beating.
China Eastern Airlines plunged over 7 pct after it warned of a significant 2008
loss due to bad bets on fuel hedging contracts and weak demand. Other airlines
also fell sharply.
China Mobile was down on concerns over the group's massive expenditure for 3G
services and growing competition from rivals.
Mainland banks remained under pressure after share sales by some strategic
investors last week.
Macau gaming stocks slumped as a weekend visit to the territory by a senior
Chinese official did not result in any announcement on easing of visa
restrictions for mainlanders.
The Hang Seng index closed down 406.44 points or 2.83 pct at 13,971.00, off a
low of 13,895.04 and high of 14,312.26.
Turnover was 46.26 bln hkd.
"The market was hit by poor US data. Investors also focused on company
earnings... following profit-warnings from local firms," said Matthew Kwok,
research head at Tanrich Securities.
Data released Friday showed the US economy shed 2.6 mln jobs last year, the
most in a year since 1945, amid a deepening recession. Unemployment rate rose to
7.2 pct, the highest in nearly 16 years.
Locally, China Eastern Airlines joined the list of firms issuing earnings
warnings, after Cathay Pacific and Lenovo cautioned last week.
Kwok noted that China banks remained weak after strategic investors sold shares
in some lenders.
An entity controlled by Hong Kong tycoon Li Ka-shing sold 2 bln shares of Bank
of China last week, while Bank of America sold sold 5.62 bln shares of China
Construction Bank.
Kwok said the market may be volatile this week as more data, including retail
sales, will be released in the US.
"Investors will be also watching fourth-quarter results of major corporations
in the US," he said.
Kwok said the key index is likely to hover within the 13,800-14,800 range
before the Chinese New Year.
China telecom stocks were lower on worries that 3G-related expenditure will
pressure the companies' earnings going forward.
China Mobile Group, the parent company of Hong Kong-listed China Mobile Ltd,
said it expects to invest 58.8 bln yuan this year to build 60,000 base stations
around China.
Mainland media have reported that China Unicom will launch its 3G service in
May this year, while China Telecom may launch its service at the end of next
month. Beijing issued the long-awaited 3G licenses last week to China Mobile,
China Unicom and China Telecom.
China Mobile was down 1.80 hkd or 2.39 pct at 73.50, China Telecom lost 0.16
hkd or 5.54 pct at 2.73 and China Unicom gave up 0.45 hkd or 5.03 pct at 8.50.
Airlines fell sharply as China Eastern's profit-warning soured sentiment on the
sector.
China Eastern Airlines (CEA) said it expects a significant net loss for 2008
due to fuel hedging losses and weak demand.
It said that fair value losses on its jet fuel hedging contracts stood at about
6.2 bln yuan at the end of December, widening from 1.83 bln at the end of
October.
The carrier incurred a cash loss of 14.15 mln usd from the settlement of
aviation fuel hedging contracts in December after fuel prices declined further.
CEA slumped 0.08 hkd or 7.14 pct to 1.04, Air China dropped 0.21 hkd or 9.42
pct to 2.02 and China Southern was down 0.09 hkd or 6.72 pct at 1.25.
Cathay Pacific, Hong Kong's flag carrier, shed 0.12 hkd or 1.35 pct at 8.78.
Among other blue chips, HSBC fell 0.95 hkd or 1.27 pct to 73.75, Hong Kong
Exchanges slipped 3.50 hkd or 4.47 pct to 74.75 and China Life was down 0.85 hkd
or 3.60 pct at 22.75.
PCCW was up 0.05 hkd or 1.34 pct at 3.77. The company said it will hold an
extraordinary general meeting on February 4 to seek shareholders' approval for a
revised privatization plan.
PCCW chairman Richard Li's Singapore-listed holding company, Pacific Century
Regional Developments, and China Network Communications proposed last month
offered to buy out PCCW's minority shareholders at 4.5 hkd a share, sweetening a
previous offer of 4.2 hkd.
Among China financials, ICBC lost 0.19 hkd or 5.21 pct at 3.46, China
Construction Bank slipped 0.19 hkd or 4.85 pct to 3.73 and Bank of China was
down 0.12 hkd or 6.12 pct at 1.84.
The H-shares financial sector index was down 501.51 points or 5.13 pct at
9,277.37.
Personal-computer maker Lenovo was down 0.05 hkd or 2.9 pct at 1.68, extending
its sharp falls of the previous two sessions after it warned of losses for the
December quarter and announced job cuts.
China Shenhua Energy was down 0.80 hkd or 4.68 pct to 16.30 following a report
that it plans to bid for a stake in a coal unit of Anglo-Australian miner Rio
Tinto.
Henderson Investment fell 0.03 hkd or 6.25 pct at 0.45 after it said it has
terminated negotiations for the sale of its 60 pct equity interest in Hangzhou
Henderson Qianjiang Third Bridge Co.
Neo-Neon Holdings, a decorative lighting company based in China, slumped 0.38
hkd or 23.31 pct to 1.25 after saying it expects a big drop in 2008 net profit.
Strong Petrochemical Holdings closed at 2.46 hkd against its IPO price of 2.5
hkd, on its first day of trading. It opened at 2.61 hkd and moved in the
2.36-2.65 hkd range.
The oil products trading firm raised 250 mln yuan in its IPO.
Macau gaming stocks were sharply lower on disappointment that China's Vice
President Xi Jinping did not make any announcement on easing of visa
restrictions for mainlanders.
Xi, during a two-day visit to Macau, urged the territory to diversify its
economy as the gaming hub suffers from falling tourist numbers amid the global
financial crisis.
Contrary to speculation that he would announce a relaxation of restrictions on
mainlanders visiting Macau -- where they make up the the bulk of visitors to the
casinos -- Xi was silent on the matter.
Melco lost 0.34 hkd or 12.41 pct at 2.40, SJM fell 0.19 hkd or 10.16 pct at
1.68 and Galaxy Entertainment was down 0.28 hkd or 19.44 pct at 1.16.
The stocks had rallied recently on hopes that Beijing would ease visa
restrictions for mainland visitors.
The Hang Seng China Enterprises index closed down 412.58 points or 5.34 pct at
7,311.23..
(1 usd = 7.8 hkd)
roby.lau@xfn.com
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