STOCKWATCH: Hong Kong GEM stocks higher on rotational buying, NASDAQ

HONG KONG (AFX-ASIA) - GEM-board shares were higher in early trade on rotational interest, supported by further gains on NASDAQ overnight, dealers said.	    However, the gains are unlikely to be sustained for long given the continued pessimism about the earnings prospects for most of these companies, they said.	    At 11:08 am, the GEM Index was up 6.22 points at 277.69 on trade 177.52 mln hkd. The Hang Seng Index was down 23.04 points at 13,525.91.	    Kenny Tang, associate director of Tung Tai Securities, said the strong performance on the GEM board reflects rotational interest.	    "The market was sharply higher yesterday and investors will lock in profits in the blue chips ... buying interest will switch to the GEM board," Tang said.	    "It is highly speculative and the outlook for GEM stocks (remains) negative," he added.	    Jack Tsui, an analyst with South China Brokerage, said the rise in NASDAQ promoted buying interest on the GEM board, with the positive results for eBay Inc giving an additional boost to the sector.	    However, Tsui said his house is negative about the outlook of GEM stocks, because of the difficult operating environment for hi-tech and internet companies, adding that it will take a long time for them to turn their business concepts into actual revenue.	    "For instance, it will be difficult for tom.com to be very profitable in the short term," he said.	    "Tom.com is (now) trying to develop a traditional marketing business so that it can obtain stable income," he said.	    tom.com was up 0.25 hkd or 11.90 pct at 2.35, hongkong.com added 0.03 or 8.10 pct at 0.40 and Sunevision rose 0.17 or 8.58 pct to 2.14.	    FE Polychem was up 0.075 at 2.60 and Phoenix TV gained 0.05 to 1.56. 

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