Hong Kong stocks firmed on Thursday, as the strong finish of the Tokyo Nikkei boosted sentiment, ending a two-day sell-off. But some analysts warned the market was due for further declines as sentiment remained cautious.
The benchmark Hang Seng index rose 0.11 percent to 15,510.13 after Japanese stocks gained more than 400 points, or 2.62 percent. Investors were relieved that the Bank of Japan would keep short-term interest rates around zero for now.
"The market is still weak. Investors are still cautious after the fall," said Andrew To, sales director at Tai Fook Securities. "It's amazing how sentiment turned so drastically in recent days," he said, saying interest rate worries was one culprit.
Other analysts wrote off the current conditions as par for the course.
"I'm still pessimistic about the market in March," said Ernie Hon, analyst at ICEA Securities Asia Ltd. "But it seems there's a tendency to get soft during this time because of the reporting season when there's a lot of profit-taking."
The H-shares, or shares in Hong Kong-listed mainland firms, extended their losses as the China Enterprises index fell 0.38 percent to 6,206.90, weighed by declining energy shares, which tracked falling oil prices.
With H-shares almost 10 percent off their year highs, some analysts said it may be time to buy.
"At this level, the H-shares look attractive, especially the financial services stocks," said Tai Fook's To.
Oil and metals were among the day's losers, with offshore oil producer CNOOC Ltd falling 1.6 percent to HK$6.15 while gold miner Zijin Mining Group Co Ltd slid 3.16 percent to HK$4.60.
Blue chip Hongkong Electric Holdings Ltd edged up 0.14 percent to HK$35.70 after reporting its 2005 net profit had jumped 37 percent, beating forecasts, thanks to a one-off gain from the sale of part of its stake in Australian power assets.
Conglomerate Swire Pacific also gained, rising 0.2 percent to HK$75.30 after reporting a 34 percent rise in its core 2005 profit, with overall earnings virtually flat despite a gain on property revaluations.
Hong Kong Exchanges and Clearing Ltd (HKEx) extended its loss, dropping 2.2 percent to HK$37.85 after the city's bourse operator did not declare special dividend pay-outs despite its better-than-expected earnings. Turnover was HK$28.0 billion (US $3.6 billion), down from Wednesday's HK$41.2 billion.
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