Hong Kong shares close morning lower on profit taking

HONG KONG (AFX-ASIA) - Share prices closed the morning lower on profit taking after yesterday's significant gains, dealers said.	    The added, however, that the losses were limited by investor expectations that the U.S. Federal Reserve will further reduce interest rates.	    They said major GEM listings, such as tom.com, Sunevision and hongkong.com, rose as investors moved funds from blue chips to the GEM board on the back of the continued rally on NASDAQ. The gains here were limited, however, by continuing concerns about the fundamentals of GEM-listed companies.	    Dealers said the utility sector, which was the only loser yesterday, saw a technical rebound.	    The Hang Seng index closed the morning down 44.80 points at 13,504.15, off an early low of 13,429.86 and off an early high of 13,570.69, on turnover of 5.37 bln hkd.	    The Hang Seng April contract last traded at 13,503 points.	    The Hang Seng China Enterprises index was down 9.07 points at 443.23 and the CAC index was down 10.48 points at 1,141.44.	    TraHK was down 0.05 hkd at 13.65 on volume of 2.97 mln units.	    The GEM index was up 0.97 points at 272.44 on turnover of 278.76 mln hkd.	    Bruce Ruffy, head of sales with Dresdner Kleinwort Wasserstein Securities, said the correction was expected after yesterday's strong gains.	    China Mobile fell 0.60 hkd to 38.30 on volume of 9.17 mln shares after the company said it has reduced international internet protocol call charges by up to 50 pct.	    Hutchison Whampoa shed 1.00 to 88.75 and Pacific Century CyberWorks lost 0.05 to 2.70.	    SmarTone fell 0.10 to 9.35 after its unit SmarTone Broadband laid off 58 employees yesterday.	    "However, compared with yesterday's rally, the correction was light. Hopes of further interest rate cuts in the U.S. lent support to the market," Ruffy said.	    Dealers said the rate cut expectations attracted follow-through buying in the bank sector.	    HSBC rose 0.50 to 99.00 and Hang Seng Bank gained 0.50 to 95.75, although Bank of East Asia fell 0.15 to 17.65.	    In the property sector, Cheung Kong fell 0.50 to 87.00, Sun Hung Kai Properties shed 0.25 to 74.75 and New World Development lost 0.15 to 9.80, while Henderson Land rose 0.10 to 37.50	    Wharf rose 0.15 to 19.00 on laggard buying.	    Ruffy said concerns about the U.S. economy and further volatility in U.S. stock prices remained in place.	    Few can be sure "whether U.S. private consumption will pick up ... It is hard to predict when the equity markets there will stabilise," Ruffy said.	    Bank of China International Securities vice-president Johnson Hui agreed, saying he expects the local market will continue to consolidate between 12,800 points and 13,600 points in the short term.	    Dealers said GEM board listings opened sharply higher as funds were moved from blue chips to the GEM board on the strength of NASDAQ's continued gains, but the strength was reduced to some extent in late morning trade on fundamental concerns.	    Ruffy said institutional investors have paid little attention to the GEM board, adding that this morning's buying most likely came from retail investors.	    Tom.com rose 0.15 to 2.25, Sunevision gained 0.07 to 2.05 and hongkong.com added 0.005 to 0.375.	    Dealers said utility stocks staged a technical rebound despite the correction in the broader market.	    CLP Holdings rose 0.50 to 31.90, Hong Kong and China Gas gained 0.15 to 9.30 and Hongkong Electric added 0.25 to 27.05.	    Among China related stocks, China Resources rose 0.20 to 11.30, while Shanghai Industrial was unchanged at 12.70 and Legend fell 0.05 to 5.85.	    CNOOC fell 0.35 to 6.85 on oil price concerns, while PetroChina rose 0.02 to 1.48 ahead of its 2000 results due on Monday.

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