Hong Kong shares close lower led by China Mobile; little impact from duty cut

HONG KONG (AFX-ASIA) - Share prices closed lower led by China Mobile on concerns that the tariff rate cuts in its new six-tier pricing scheme will trigger a price war in China's mobile phone market, dealerssaid. The proposal to cut the stamp duty on stock transactions, announced along with the government's year to March 2002 budget, provided little support, they added. They said concerns about further volatility on Wall Street and how the Federal Reserve will act on interest rates in the upcoming FOMC meeting on March 20 still kept many investors from buying. The Hang Seng index closed down 143.69 points at 14,177.36, off a high of 14,432.22 and a low of 14,141.41, on turnover of 7.84 bln hkd. The Hang Seng March contract last traded at14,060 points. The Hang Seng China Enterprises index was down 2.52 points at 404.49, and the CAC index was down 2.88 points at 1,178.61. TraHK fell 0.15 to 14.25 hkd on volume of 7.78 mln units. The GEM index was down 4.30 points at 288.38 on turnover of 176.32 mln hkd. The MTR Corp was down 0.10 at 14.00 hkd. Dealers said selling in China Mobile emerged in afternoon trade to send the Hang Seng Index into negative territory amid fears that the mobile phone operator's price cuts will spark a price war and further squeeze its profitability. China Mobile lost 1.30 hkd or 3.38 pct to 37.10 on volume of 21.53 mln shares, while China Unicom was unchanged at 11.05. They said the market remained unsettled with volatility in external markets, in particular high tech stocks in the U.S. "The cut in stamp duty on stock transactions is minor. So, the positive factor from the tax cut has been overwhelmed by the already cautious sentiment," Peter Lai, director with OCBC Securities, said. In the budget for the financial year to March 2002, Financial Secretary Donald Tsang proposed to cut the stamp duty on stock transactions to 0.20 pct from 0.225 pct per round transaction. The government also proposed to raise duties on alcohol and tobacco, and raise the departure tax and driving and vehicle licensefees. "Investors have many other things to worry... They are watching closely the next action the Fed will take in terms of interest rate cuts," Lai said. Assistant sales manager with Vickers Ballas Kenneth Tang said the price cut concerns are expected to continue to cloud China Mobile, adding without a stable China Mobile, it will be hard for the Hang Seng Index to mount a breakthrough. Among other telecom stocks, Hutchison Whampoa was unchanged at 89.50, while Pacific Century CyberWorks shed 0.025 to 4.25. HSBC was unchanged at 102.50, while Hang Seng Bank fell 0.50 to 94.50. New World Development gained 0.05 to 13.65, while Cheung Kong fell 0.25 to 92.50, Sun Hung Kai Properties fell 1.50 to 84.00 and Henderson lost 1.30 to 45.80. Legend rose 0.15 hkd or 2.50 pct to 6.15 after it announced plans to spin off and list Digital China in Hong Kong. Cathay Pacific fell 0.05 to 12.05 after its 2000 results. First Pacific gained 0.10 hkd or 4.44 pct to 2.35 after the company announced a plan to dispose of a 19.8 pct stake in property consulting firm Savills Plc. HAECO was unchanged at 14.00 after its 2000 results. On the GEM board, tom.com fell 0.15 to 2.225 and Sunevision lost 0.075 to 2.65.

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