Hong Kong shares close higher as Dao Heng Bank outperforms
HONG KONG (AFX-ASIA) - Share prices closed higher on follow-through buying, with sentiment bolstered by gains of Hong Kong stocks in London last night, dealers said. Dao Heng Bank and Guoco Group outperformed the broader market today, gaining sharply after Guoco agreed to sell its 71.3 pct stake in Dao Heng Bank to DBS Group at a substantial premium, they said. Red chips and H-shares rose further amid easing tensions between China and the U.S., after China released the crew of a U.S. surveillance aircraft involved in a collision with a Chinese fighter over the South China Sea. The Hang Seng index closed up 283.04 points or 2.23 pct at 12,989.47, off a high of 13,018.57 and a low of 12,769.25 on turnover of 10.02 bln hkd. The Hang Seng April contract last traded at 12,984 points. The Hang Seng China Enterprises index closed up 4.59 points at 420.79 and the CAC index up 29.41 points to 1,076.61. TraHK closed up 0.30 hkd at 13.15 hkd on volume of 6.21 mln units. The GEM index finished down 0.44 points at 254.45 on turnover of 110.80 mln hkd. Conita Hung, head of research with Mansion House Securities, said: "The benchmark index was struggling at around its key resistance level of 13,000 points today. However, profit-taking may emerge post-Easter holidays after the index posted significant gains over the past few trading sessions." Dealers said, however, it is difficult to say whether the market will be able to stabilize above the 13,000 points resistance level. Peter Lai, associate director with OCBC Securities, said: "The Hang Seng Index is seen trading between 12,000 and 13,200 points in the near term, while the latest developments on the U.S. markets over the weekend should continue to dictate the performance of the local bourse." Dealers said Dao Heng Bank and Guoco Group led the gains, following DBS Bank's proposal to acquire Guoco Group's Dao Heng Bank stake with two options for Dao Heng Bank shareholders -- 60.14 hkd per share in cash or 43.26 hkd per share in cash plus one share in DBS Group wholly-owned unit Diamond Holdings. "Dao Heng's share price is expected to be capped around current levels, as the counter rose over 50 pct in a single trading day," Mansion's Hung said. Dao Heng Bank rose 19.40 hkd or 51.59 pct to 57.00 on trade of 29.98 mln shares, while Guoco gained 11.10 hkd or 40.36 pct to 38.60 on trade of 14.63 mln shares. HSBC rose 1.25 to 95.25 and Hang Seng Bank gained 1.00 to 91.50. Dealers said the DBS/Dao Heng Bank deal also stirred up buying in medium and small-sized banks on expectations of further acquisition deals involving these banks. "The acquisition price for Dao Heng Bank was very high, which has jacked up the valuation of these small-to-medium banks in the territory," Hung said. HKCB Bank rose 0.20 to 2.625 and Dah Sing Financial gained 2.30 to 39.80. CITIC Ka Wah Bank added 0.10 to 2.35 and LCH Bank rose 0.70 to 9.25. Telecom stocks rose in line with gains in their U.S. counterparts overnight, dealers said. In the telecom sector, China Mobile rose 0.50 to 36.50 hkd and Hutchison Whampoa gained 2.50 to 82.25. Pacific Century CyberWorks added 0.125 to 2.75. It was earlier reported that company deputy chairman Peter To will resign. In the property sector, Cheung Kong gained 2.50 to 81.50, Sun Hung Kai Properties added 2.25 to 71.50, Henderson Land added 1.30 to 35.70 and New World Development was up 0.15 at 9.05. TVB rose 0.70 to 38.60 after its 2000 results. On the GEM board, tom.com was up 0.025 at 2.05 and Sunevision up 0.04 at 2.00, while hongkong.com was unchanged at 0.295. The easing Sino-U.S. tensions led to further buying in China plays, dealers said. CATIC Shenzhen rose 0.11 to 1.05, Luoyang Glass gained 0.03 to 1.22 and Harbin Power added 0.03 to 0.76. China Overseas rose 0.07 to 0.98 after its 2000 results. CNOOC fell 0.25 to 6.70 after its 2000 results. China Resources added 0.45 to 10.75 after its 2000 results, and Shanghai Industrial rose 0.20 to 12.00.
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