Hong Kong shares close lower on Wall St/HSBC; bargain-hunting cuts losses

HONG KONG (AFX-ASIA) - Share prices closed lower on the back of falls on Wall Street overnight, although late bargain-hunting in red-chips and H-shares trimmed the losses, dealers said. They said overall market sentiment was negative because of the steep decline in HSBC as a result of a recommendation downgradeby Goldman Sachs. Property stocks came under selling pressure after Swire Pacific's huge provision for the Ocean Shore project was perceived as an indication of Swire's pessimism about the property market in the medium term, they said. The Hang Seng index closed down 283.69 points at 13,493.03, off an early low of 13,277.52 and an early high of 13,517.08, onturnover of 9.88 bln hkd. The Hang Seng March contract last traded at 13,466 points. The Hang Seng China Enterprises index was down 1.99 points at 377.40, while the CAC index was down 1.60 points at 1,087.05. TraHK was down 0.25 at 13.65 hkd on volume of 22.53 mln units. The GEM index was down 1.24 points at 276.26 on turnover of 113.82 mln hkd. MTR Corp was down 0.45 at 13.10 hkd. Alex Tang, head of research of Core Pacific Yamaichi Securities, said HSBC led today's initial decline, after its losses in London last night, which was sparked by the recommendation downgrade byGoldman Sachs. "HSBC was the culprit and it accounted for 40 pct of the falls in the Hang Seng Index today ... Other banks fell in line wit(HSBC)," he said. "Some brokerages suggested a fair price for HSBC at 90.0-95.0 in the medium term," he said. The financial sub-index dropped 626.15 points to 20,592.75. HSBC was down 3.50 at 99.00, Bank of East Asia down 0.30 at 17.80 and Hang Seng Bank down 0.50 at 89.0. Tang said property stocks remained out of favour after Swire Pacific made a huge provision for the Ocean Shore residential project in Tseng Kwan O, reflecting its pessimism about the property market in the medium term. The property sub-index was down 517.18 points at 17,910.78. Cheung Kong dropped 1.0 at 88.0, Sun Hung Kai Properties was down 3.25 points at 76.00 and New World Development fell 1.0 to 11.60. Great Eagle was down 0.05 at 13.00 after its 2000 earnings results. It recorded a net profit of 622.95 mln hkd in 2000, compared with 645.32 mln in the previous year. Rising against the general decline were utilities stocks, as they were defensive in nature, dealers said. The utilities sub-index was up 20.74 points at 21,499.78. CLP was up 0.70 to 39.90, and Hongkong Electric was 0.25 firmer at 28.50. Marty Chan, an analyst with Polaris Securities, said a technical rebound was notable in red-chips and H-shares as the two sectors were seen as safer investment choices, ahead of China's imminent WTO admission. Among those stocks, China Eastern closed up 0.01 at 1.05, Yizeng Chemical up 0.01 at 1.45, China Merchants up 0.05 at 5.70, andLegend up 0.25 at 5.50. In the telecom sector, China Mobile was down 0.20 at 36.80, China Unicom down 0.10 at 10.35, Hutchison down 1.50 at 84.75, and PCCW down 0.025 at 4.05. On the GEM board, tom.com was up 0.025 at 2.125, hongkong.com up 0.005 at 0.38, and Sunevision down 0.125 at 2.375.

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