Hong Kong shares --3 (H-shares face profit taking as funds move to blue chips)

At 11:50 am, the Hang Seng Index was up 506.28 points at 13,479.08 on turnover of 8.63 bln hkd, while the Hang Seng April contract last traded at 13,457 points.	    Lai of OCBC Securities said funds have been moving to blue chips from H-shares after the surprise rate cuts.	    "H-shares had outperformed the broader market for some time due to their positive fundamentals on the back of robust economic growth in China. Now, the sector faces profit taking," Lai said.	    Harbin Power fell 0.04 to 0.97 hkd and Shenyang Public Utility shed 0.095 to 1.98. 	    Jilin Chemical fell 0.03 to 0.75 and Shanghai Petrochemical shed 0.02 to 1.07. 	    Chengdu PTIC Telecommunications fell 0.07 to 1.43 after 2000 results.	    Lai said the fall in interest rates will benefit the Hong Kong economy in the long run, although it is hard to judge the short term effect of the rate cuts from the beginning of this year.	    "A lot of small and medium sized enterprises, in particular from the retail sector, will see their financial burden reduced due to the falling interest rates. It is good for the Hong Kong economy," Lai said.	    Lai added that improvement in the economy is expected to boost the stock market in the long run.	    On the GEM board, tom.com rose 0.125 to 2.20, while Sunevision was unchanged at 2.00. 

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