Hong Kong stocks rose on Wednesday as investors took cues from Wall Street gains, helped by Warren Buffet's offer to reinsure $800 billion in municipal debt risk from the top three bond insurers. Buffet's offer calmed worries about further fallout from the credit crisis, sending global lender HSBC Holdings plc up nearly 3 percent at one point.
But shares in Hong Kong airline Cathay Pacific Airways and its controlling shareholder, Swire Pacific, slid following a broker downgrade. The market stayed on its path to recovery for a second straight day after taking hits last week, but shares were off their day highs in afternoon trade as the yuan-denominated mainland stock markets sank further. Investors were also wary that the US equity market may end its two-day winning streak. "The rebound may be close to finished," said Alex Wong, director at Ample Finance Group.
"Investors are cautious, bearish. We may test the downside, and eventually go to 21,700 this month." Others said the tight trading range and broker downgrades could foreshadow a pause in the market. "The market is still technically weak," said Andrew To, sales director at Tai Fook Securities.
"If you add the gains of the last two days, it hasn't been significant. There's a still downward revision in earnings. The market appears to be entering into a consolidation zone.
The daily range has narrowed significantly." The benchmark Hang Seng Index closed up 1.1 percent, or 247.88 points, at 23,169.55. The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, gained 1.7 percent, or 212.69 points, to 12,949.38.
Mainboard turnover was HK$82.5 billion (US $10.6 billion), up from Tuesday's HK$67.2 billion. HSBC, the biggest boost to the blue chips, ended up nearly 2 percent at HK$112.40. Chinese oil producer PetroChina Co Ltd leapt 2.4 percent to HK$11.20. Top mainland lenders Industrial & Commercial Bank of China gained 3.6 percent to HK$4.92 and China Construction Bank rose 2.6 percent to HK$5.56.
Hong Kong carrier Cathay Pacific slid 3 percent to HK$16.68, touching levels not seen since October 2006. Goldman Sachs downgraded the stock to sell from buy, saying Cathay's second-half results for fiscal year 2007 may have been the peak in yield growth. Goldman also said economic uncertainty and rising competition from Middle Eastern airlines could undermine Cathay's position. Goldman also added Cathay to its conviction sell list.
Swire Pacific fell 2.6 percent to HK$95.25 after Goldman Sachs put the property-to-aviation conglomerate on its Conviction Sell list, citing uncertainties at Cathay Pacific in which Swire is a controlling shareholder. Handset maker Foxconn International Holdings tumbled 5.6 percent to HK$12.20 amid concerns about a slowing global economy and the health of Motorola, one of its key customers.
Comments
Comments are closed.