STOCKWATCH: China Aerospace sharply higher after MSCI changes

HONG KONG (AFX-ASIA) - China Aerospace International Holdings was sharply higher after an unexpected inclusion into the MSCI China index, dealers said.

	    They said the rally might not be sustained, with the company's business outlook key to its performance in the medium term.

	    At 11:34 am, China Aerospace was up 0.04 hkd or 5.53 pct at 0.79 hkd on turnover of 29.39 mln shares.

	    The Hang Seng Index was up 220.70 points at 13,679.88.

	    Kenny Tang, research manager with Tung Tai Securities, said: "The inclusion of China Aerospace into the MSCI index was sort of unexpected. However, the company might only see some temporary support from the news, as its gearing ratio remains high at the moment".

	    China Aerospace International posted a net loss of 1.01 bln hkd during 2000, compared with 383.96 mln hkd in 1999. 

	    The company made impairment losses of 583.21 mln hkd for its long term investment in APT Satellite Holdings Ltd in 2000.

	    "I think 0.80 hkd will be a strong resistance for China Aerospace. After today's rise, investors will be back to focus on the company's business development," Tang said.

	    He added that the MSCI new weightings could only have a modest impact on the market as the changes will only be completed in the next 6-12 months.

	    Other newly included shares in the MSCI China index were mixed in the morning, with investors well-prepared for the new entrants, dealers said.

	    "Some new entrants posted losses, while some new drop-outs posted gains in the morning. Most of the new changes have been taken into account. Fund managers readjusted their stock portfolios well beforehand," Josephine Hui, director with Celestial Securities said.

	    China Resources was down 0.05 at 12.65, Sinopec shed 0.02 to 1.48, China Eastern Airlines was 0.01 lower at 1.29, and Brilliance China dropped 0.025 to 2.40.

	    China Travel gained 0.03 to 1.68, CNOOC added 0.15 to 8.15, Yanzhou Coal was up 0.075 at 3.25, Shandong Power up 0.03 at 1.85, and China Everbright up 0.05 at 8.20.

	    China Resources Beijing Land was unchanged at 2.275.

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