Hong Kong shares end morning flat on lingering caution over US economy
Hong Kong shares ended Friday morning little changed in volatile trade as export-oriented companies traded lower on concerns over a slowdown in consumer demand in the US, reversing the market's early gains.
Early trade was firmer after Federal Reserve chairman Ben Bernanke pointed to further rate cuts in the US, giving investors an excuse to buy stocks, although underlying sentiment remained cautious.
The Hang Seng Index finished the session up 27.40 points at 27,258.26, after swinging between 27,593.70 and 27,153.50.
Turnover was 73.35 billion Hong Kong dollars.
""The US market may have rebounded last night on expectations of rate cuts, but it is not necessary that the US economy will also rebound because of these rate cuts,"" said Castor Pang, strategist with Sun Hung.
The Fed is widely expected to lower rates by as much as half a percentage point this month to keep the world's largest economy from slipping into a recession.
""A lot of bad news has been pouring in over the last few days and this has turned investor sentiment negative,"" he said.
A series of disappointing economic data from the world's biggest economy -- from weak housing and rising unemployment to falling consumer spending and investments -- has made investors generally cautious
Taiwanese mobile component producer Foxconn International Holdings fell 16 cents or 1.1 percent to 15.08 dollars.
Hong Kong-based apparel and accessories retailer Esprit, which has a significant presence in Europe and US, lost 3.1 dollar of 3.1 percent at 97 dollars.
Li & Fung, which supplies consumer products to US retailer including Wal Mart, was down 40 cents or 1.5 percent at 26.55 dollars.
Asia's biggest refiner, Sinopec Corp, extended Thursday's losses after the Chinese government said it will freeze prices of energy products to curb inflation. Sinopec was down 28 cents or 2.6 percent at 10.48 dollars as the refiner is expected to be hurt further by the increasing gap between rising international crude prices and regulated prices of refined oil products in China.
China Unicom advanced 1.06 dollars or 6.1 percent to 18.58 dollars after a newspaper reported that the mainland government had approved the long impending restructuring in the telecom sector.
Under the plan, the nation's largest mobile phone operator, China Mobile, would be merged with fixed line company China Tietong, the South China Morning Post reported Friday, citing unnamed sources.
The GSM business of China Unicom, the smaller cellular phone operator, would be merged with fixed line company China Netcom Group.
China Telecom Corp, the country's biggest fixed-line phone operator, would acquire Unicom's CDMA mobile phone business.
China Netcom was up 5 cents at 25.10 dollars.
But other telecom blue chips, China Telecom and China Mobile, ended the morning lower as some investors dismissed the report as speculation.
""This is just more speculation, there has been no formal announcement. So investors are selling the stocks that have been overbought,"" said SHK's Pang.
Property counters recovered from Thursday's weakness, on hopes that the Fed will cut rates and trigger a similar reduction in Hong Kong. The sub-index was up 159.57 points or 0.4 percent at 37,944.62.
Hang Lung Properties gained 50 cents or 1.5 percent at 34.05 dollars. But Cheung Kong (Holdings) continued to slide, losing 30 cents at 140.70 dollars on talk that unnamed investors have placed shares worth 4.70 billion dollars.
Local banks were mostly higher as lower rates are expected to raise demand for loans.
Bank of China Hong Kong was up 85 cents or 3.7 percent at 23.70 dollars while the Hang Seng Bank, a unit of HSBC, gained 2.50 dollars or 1.6 percent at 162.50.
Mainland lenders also advanced on hopes for better-than-forecast profit growth for 2007.
China Construction Bank was up 15 cents or 2.3 percent at 6.66 dollars while China Merchants Bank rose 80 cents or 2.5 percent to 33 dollars.
Cathay Pacific Airways climbed 44 cents or 2.2 percent to 20.20 dollars. Hong Kong's biggest airline said Thursday that the company and its Dragonair unit posted a 10.4 percent increase in passenger numbers to 2.1 million from a year earlier.
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