Hong Kong shares up

The Financial Daily - - MONEY & FOREX -

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

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