Hong Kong's stocks finished a touch lower on Tuesday with investors taking profits on recent winners such as Hutchison and Esprit in quiet pre-Christmas trade. But analysts said the market was well supported by strong liquidity thanks to continued low local borrowing rates. Investors remained unfazed by the recent decision to scrap the city's US $3 billion real estate investment trust IPO and focused on a promising outlook for China's robust economy in the year ahead.
"The Link REIT issue is pretty much gone as far as the market is concerned. Liquidity is still abundant," said Martin Lau, a director at First State Investments.
The blue chip Hang Seng Index ended 0.23 percent, or 33.25 points lower, at 14,180.79. Volume was slightly below recent averages with HK$18.1 billion worth of shares (US $2.32 billion) changing hands.
Traders expect the market to trade as high as 14,500 before calendar year end with rebounding world oil prices posing the largest immediate risk to sentiment.
US crude futures held above US $45.50 a barrel in Asian trade as saboteurs set a complex of oil pipelines ablaze in northern Iraq and ahead of fresh data on US oil inventories due for release on Wednesday.
Hong Kong markets will shut at midday on Friday ahead of the Christmas holiday with trade set to resume on Tuesday.
Shares in recent top performing blue chips such as Hutchison Whampoa Ltd fell after rallying more than 11 percent in the past months on hopes the company's hefty investment in 3G telephone services may soon pay off.
Hutchison shed 1.41 percent to HK$70 after touching a fresh 52-week peak late last week.
Global retailer Esprit Holdings fell 2.08 percent to HK$47. Esprit has jumped more than 85 percent so far this year thanks to strong European sales and a rising euro currency, making it the top performing blue chip in 2004.
But Beijing-backed container port and investor COSCO Pacific continued to gain favour. COSCO, the number two top performing so far this year, rose a further 1.98 percent to HK$15.45 on a bullish outlook for China exports in 2005.
On the downside, TCL Communication Technology Holdings fell 6.06 percent to HK$0.62 after China's No 2 domestic cellphone maker said it may post a fourth-quarter loss and added its CEO had resigned amid a steep slide in November domestic sales.
Foreign mobile handset makers have recently introduced a new range of models developed for China and other emerging markets, including low-priced models aimed at the large majority of Chinese who earn less than US $100 a month.
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