Hong Kong shares up
SHANGHAI/HONG KONG: Financial counters led a broad rebound in Hong Kong shares on Wednesday, as risk appetite improved with traders settling their positions for the end of the first quarter.
Hutchison Whampoa Ltd , billionaire Li Ka-shing's flagship ports-to-telecoms company, soared 5.1 per cent to a 3week high after it posted a forecast-bearing 2010 earnings partly driven by a turnaround in its 3G telecommunications arm. It climbed as much as 5.4 per cent in early trade.
All eleven financial counters in the benchmark Hang Seng Index gained, with China Construction Bank, Industrial and Commercial Bank of China, HSBC and Bank of China the leading lights. Hong Kong's main stock index finished up 1.7 per cent to 23,451.4, reversing two days of losses after gaining 3.8 per cent last week. But analysts were unsure whether this trend would continue into April and the second quarter, with China inflation particular concern. Risks in Japan, North Africa and the Middle East also weigh.
This caution was evident on the China markets, which also felt lingering worries over further monetary tightening, possibly next month. The Shanghai Composite Index closed down for a second consecutive day, edging down 0.1 per cent to 2,955.8 on Wednesday, following a 0.9 per cent dip on Tuesday.
The official China Securities Journal said on the front page that higher-than-expected liquidity was likely to push the People's Bank of China to carry out more tightening policies in April. Some analysts, however, said any further tightening would benefit Chinese banks. "Policy tightening is good for banks," said May Yan, Barclays Capital's head of research for China banks. "The more the Chinese central bank tightens, the more the banks will charge because of tightening liquidity." Yan said that Chinese banks will report strong first-quarter earnings at the end of April and this would give some upside for their Hong Konglisted H-shares.
The Hang Seng Finance Subindex, containing the 11financial constituents of the benchmark, is up 1.4 per cent for the quarter so far, underperforming the 1.8 per cent uptick on Hong Kong's main stock index. TIGHTENING FEARS WEIGH ON CHINA In China, traders said liquidity conditions may not tighten in the coming weeks because hundreds of billions of yuan worth of PBOC bills were set to mature and foreign capital appeared to still be flowing into China on a large scale. The Shanghai index is likely to consolidate under the key 3,000-point resistance level in the short- term, said Zhang Yanbin, an analyst at Zheshang Securities in Shanghai, adding that inflation and policy concerns "are also keeping investors cautious." The Shanghai index was also weighed down by profit-taking in some selective shares that had recently outperformed the market in speculative trade.-Reuters