Monday, January 21, 2008

Hong Kong stocks rebound 86 points

Hong Kong Share prices closed firmer after a choppy session as investors await a U.S. economic stimulus package aimed at preventing the world's largest economy from slipping into a recession. The market opened sharply lower following a sell-off on Wall Street and weak U.S. economic data, but recovered in the afternoon on hopes over the U.S. stimulus plan.

The blue-chip Hang Seng Index ended 86.89 points, or 0.4 percent, higher at 25,201.87, after swinging between 24,134.25 and 25,378.24 during the session. The benchmark index was down 1.2 percent at midday before reversing course in the afternoon on bargain hunting, traders said.

Turnover totaled 127.36 billion Hong Kong dollars (16.34 billion U.S. dollars), down from 138.29 billion (17.74 billion U.S. dollars) Thursday.

Traders said they expect the volatility to continue in the near term on the risk of a U.S. recession, but a technical rebound is possible next week after the index fell more than 6 percent this week.

The U.S. Federal Open Market Committee is scheduled to meet Jan. 30 and economists widely expect it to cut the federal funds rate, now 4.25 percent, by at least another quarter percentage point. Hong Kong typically follows interest rate adjustments in the U.S. because of the city's currency peg to the U.S. dollar.

Industrial and Commercial Bank of China gained 5.4 percent to 5. 27 Hong Kong dollars after it said it expects its 2007 net profit increased over 60 percent on significant growth in service fees and commissions.

China Construction Bank rose 1.5 percent to 6.13 Hong Kong dollars after it gained over 3 percent Thursday. The bank said its 2007 net profit rose about 48 percent on a substantial increase in net interest and fee income.

Telecommunications companies jumped on hopes China will soon restructure its telecom sector and launch long-awaited third- generation mobile services, traders said. China Telecom was the biggest gainer in the sector, rising 2.8 percent to 6.55 Hong Kong dollars. China Netcom rose 2.6 percent to 25.70 Hong Kong dollars, China Unicom advanced 2.1 percent to 17.80 Hong Kong dollars and China Mobile gained 0.4 percent to 123 Hong Kong dollars.

In contrast, HSBC, which has a weighting in the Hang Seng Index of 15 percent, nudged 0.5 percent lower to 118.40 Hong Kong dollars because of concerns over the impact of subprime mortgage problems in the United States. (One U.S. dollar = 7.796 HK dollars)

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