Wednesday October 21, 07:26 AM
HK, Shanghai shares retreat; Huaneng Power up
By Donny Kwok and Claire Zhang
HONG KONG/SHANGHAI, Oct 21 (Reuters) - Hong Kong and China
stocks fell during Wednesday's morning session as investors
locked in profit after recent gains, with telecommunications and
metals shares weighing on the markets.
China telecommunication plays weighed on the Hong Kong market
after weak earnings, while demand for asset plays because of a
weak U.S. dollar slowed the slide.
'It was telecom stocks that dragged the market down,
otherwise the market was not panicked and investors were seen
looking to re-enter,' said Alex Wong, a director at Ample Finance
Group. 'Asset plays are still a focus with no indication of any
change in weak sentiment on the dollar in the short run.'
Brokers said asset revaluations in the wake of the weak U.S.
dollar had made local and China property stocks appealing, while
power plays, which are sensitive to mainland economic policy
changes, were also seen in demand, partly as a hedge against risk
exposure to potential power tariff changes.
Huaneng Power, China's largest electricity
provider, surged 7.5 percent to HK$5.56 after reporting that it
had swung to a net profit in the third-quarter because of
increased output from new operating units, two tariff rises in
the second half of 2008 and lower coal costs.
A Deutsche Bank (Xetra: 514000 - news) research note on Wednesday said it upgraded
Huaneng to 'buy' from 'hold' with target price set at HK$6.30.
Index heavyweight China Mobile (0941.HK - news) , the world's largest
mobile carrier, fell 1.33 percent to HK$77.70. Tthe carrier faces
limited profit growth in the coming quarters as costs of building
a new 3G network weigh and increasing competition pushes it
towards lower value subscribers.
China Telecom, China's top fixed-line phone
company, lost 1.83 percent to HK$3.75 after it said its quarterly
profit fell 48 percent as users of its core fixed-line services
continued to migrate to mobile services.
The benchmark Hang Seng Index slid 0.14 percent, or 31.38
points to 22,353.58 at midday after closing at a 14-month high on
Tuesday. Turnover was HK$35.43 billion ($4.6 billion), down from
midday Tuesday's HK$38.64 billion.
The China Enterprises Index of top locally listed mainland
Chinese companies eased 0.18 percent to 13,016.21.
China asset plays stayed firm with developer China Resources
Land surging 7.7 percent and China Overseas Land up 3.7 percent.
Guangzhou Investment was up 23.91 percent at
HK$1.71 after it announced a plan to separate its toll road
business and focus on its property business to capitalise on the
robust growth of the Chinese property market.
SHANGHAI SURGES
China's key stock index was down 0.17 percent at midday
Wednesday, retreating from a two-month intraday high with metals
shares soft as profit-taking emerged. Analysts said the index
needed to consolidate after breaking key resistance.
The Shanghai Composite Index ended the morning at
3,079.218 points, after earlier hitting an intraday two-month
high of 3,094.457.
Losing Shanghai A shares outnumbered gainers by 583 to 353,
while turnover slipped to 77.2 billion yuan ($11 billion) from
Tuesday morning (NASDAQ: TUES - news) 's 94 billion yuan.
'The index rose fast and reflected rosy expectations about
economic data due for release on Thursday. It may test 3,000 to
see if it can offer strong support,' said Chen Huiqin, senior
analyst at Huatai Securities in Nanjing.
She added that the index had limited upside because of
worries about possible monetary tightening but could climb as
high as 3,200 points.
China's central bank has pledged to maintain its loose
monetary policy to support the economy and has said it would
ensure sustainable credit growth without resorting to
heavy-handed quotas to rein in a lending spree.
But analysts said informal lending controls were possible,
and money tightening might start in mid-December, which could
make investors more careful.
The official Shanghai Securities News cited Frank Gong, a
prominent JPMorgan economist who has been bullish on China's yuan
and economic prospects for years, as saying China's benchmarks
stock index should exceed 3,600 points in three to nine
months.
Shandong Gold sank 2.96 percent to 69.50 yuan
after gold fell below $1,060 per ounce on Tuesday as the dollar
rebounded from its weakest level in 14 months versus the euro.
Bank shares were firmer. Minsheng Bank, China's
first listed non-state lender to plan a Hong Kong share offer,
rose 2.36 percent to 7.81 yuan after saying it would earn a net
profit of at least 11 billion yuan ($1.6 billion) in 2009
Huaneng Power International, China's largest
electricity provider, advanced 3.23 percent to 8.00 yuan after
saying net profit in the third quarter grew nearly fourfold as
new facilities went into production.
Guangdong Midea Electric Appliances and washing
machine maker Wuxi Little Swan both raced up by their
10 percent daily limit after their shares were suspended since
Sept. 30. Midea said it planned to increase its stake in Little
Swan by merging its washing machine business with Little Swan.
Three firms debuted in Shenzhen. Fujian Sunner Development jumped 37 percent to 27.08 yuan, Fujian Nanping Sun
Cable gained 80 percent to 36.93 yuan and Shenzhen
Comix Stationery rose 43 percent to 28.56 yuan.
(Editing by Chris Lewis)
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