Hong Kong shares close lower ahead of FOMC; China plays, utilities outperform

HONG KONG (AFX-ASIA) - Share prices closed slightly lower, reversing early  gains on profit-taking amid reduced expectations of an aggressive rate cut by the U.S. Federal Reserve tonight, dealers said.

	    Financials led the market lower, while utilities outperformed the broader market as they are considered safe havens from interest rate movements, they said.

	    H shares and red-chips also fared better than the overall market on  optimistic earnings outlooks for the companies, they added.

	    The Hang Seng Index was down 9.08 points at 13,250.09, off a low of 13,209.55 and a high of 13,350.59, on turnover of 7.42 bln hkd.

	    The Hang Seng May contract last traded at 13,294 points.

	    The Hang Seng China Enterprises Index was up 18.77 points at 497.46,  while the CAC Index was up 18.26 points at 1,228.30.

	    The Tracker Fund was up 0.10 at 13.40, and the GEM Index was up 2.10  points at 253.38 on turnover of 140.31 mln hkd.

	    "Market turnover remained small throughout the day with sentiment remaining cautious ahead of the U.S. FOMC meeting," Marco Mak, director of research with Tai Fook Securities, said.

	    Mak said some investors were concerned the Federal Reserve will not cut interest rates aggressively following recent positive U.S. economic data.

	    Mak said the Hang Seng Index should be supported tomorrow if the Fed cuts its rates by 50 basis points.

	    "I think it could test 13,500 points tomorrow if the Fed cuts interest rates by 50 basis points later today," he said.

	    The financial sub-index dropped 42.43 points to 20,424.45 while the property sub-index gained 5.69 points to 17,184.95.

	    HSBC was 0.25 lower at 96.50, Hang Seng Bank was unchanged at 88.25, while Dao Heng Bank was down 0.25 at 58.50.

	    The property sector was mixed, with some shares rebounding after yesterday's heavy losses, while others came under profit-taking pressure after gains earlier today.

	    Henderson Land was down 0.10 at 35.50 hkd, Wheelock was down 0.15 at 6.40, while Sino Land was steady at 3.525.

	    Cheung Kong was up 0.97 at 90.50, Sun Hung Kai Properties added 0.50 to 73.25 while New World Development was up 0.10 at 10.00.

	    In the telecom sector, Pacific Century CyberWorks was down 0.025 at 2.675 while China Mobile was unchanged at 37.20.

	    China Unicom gained 0.10 to 11.60 and Hutchison Whampoa was up 0.72 at 85.25.

	    Josephine Hui, director with Celestial Asia Securities, said: "The trading mood was subdued ahead of the FOMC meeting, as reflected in the thin turnover today".

	    H shares and red-chips outperformed the broader market amid optimistic earnings outlooks in these companies, dealers said.

	    "Most of these companies have relatively low P/E ratios of about 8-9 times. These shares remain attractive to investors," Hui said.

	    Denway Motors was up 0.175 at 2.90, China Resources Logic was 0.04 higher  at 0.75, and Founder was up 0.04 at 1.90.

	    Kunming Machine was up 0.35 at 3.075, First Tractor was 0.06 higher at 0.82, and Huaneng Power was up 0.425 at 5.20.

	    The Hang Seng utility sub-index was up 15.05 points at 20,655.14.

	    Hongkong Electric was up 0.05 at 26.80 and HK & China Gas rose 0.05 to 9.45.

	    On the GEM board, tom.com was up 0.05 at 2.05 after the company agreed to acquire a 49 pct stake in a print media joint venture for 1.30 bln twd. 

	    Hongkong.com was unchanged at 0.365, after the release of its Q1 results, Phoenix TV gained 0.06 to 1.51, after the release of its Q3 results.

	    Sunevision was down 0.01 at 1.80.

	    Easyknit International gained 0.065 to 0.415, on speculation that it will  be used by a metal and alloy company in North Western China as a back-door listing vehicle on the Stock Exchange of Hong Kong.

Related stock : (NIL)