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HSI cracks 21,000 as land sale fires up property plays
Last Updated(Beijing Time):2007-05-08 11:25

Hong Kong blue chips breached the 21,000-point level for the first time yesterday on strong gains in property plays. The gains were trimmed as investors took profit before today's land auction and reopening of the mainland stock markets.

The Hang Seng Index broke through 21,000 in late morning trade, reaching as high as 21,070.21, up 1.1 per cent on Friday, before falling back to close 0.27 per cent ahead at a new high of 20,896.64 points.

"It's a normal pullback after testing a new record high of above 21,000, which is prone to draw profit taking," said Patrick Yiu Ho-yin, an associate director at Cash Asset Management. "Cautious investors prefer to take profit first as they fear the mainland authorities will introduce new austerity measures to rein in the [mainland's] overheating economy and the foaming stock market later today or tomorrow."

The H-share index rose 1.08 per cent to 10,496.04 points, off an intraday high of 10,623.82.

The market's value swelled to a record HK$14.67 trillion.

Turnover was heavy at HK$67.98 billion compared with Friday's HK$63.99 billion.

Other Asian stock markets including Australia, South Korea, Malaysia and Indonesia also set new highs, with gains ranging from 1.58 per cent for Japan to 0.14 per cent for Malaysia.

The Shanghai Composite Index ended at a record high of 3,841.272 on April 30 before closing for a week-long holiday.

The mainland central bank late last month raised the amount of money commercial lenders must hold as reserves by half a percentage point to 11 per cent of deposits and the market had expected an interest rate increase would follow during the holiday.

"Market participants had expected an interest rate rise before the holiday," wrote Ha Jiming, the chief economist of China International Capital Corp, in an e-mail. "If the People's Bank of China does not raise interest rates by the end of the May Day holiday, stock prices will probably surge after the holiday and bubbles may grow larger."

Sun Hung Kai Financial strategist Castor Pang expected mainland stocks would head for another record high today if no austerity measures were imposed.

In Hong Kong, property blue chips were still the strongest drivers of the market rally despite profit taking before today's land auction.

Gains in Wharf (Holdings), Henderson Land Development and Hang Lung Properties contributed almost half of yesterday's gains. Wharf was the top performer among the blue chips with a 4.01 per cent gain to a record high of HK$32.40, followed by Hang Lung Properties with a 3.33 per cent rise to a historic peak of HK$24.80.

Wheelock Properties, which owns 7.1 per cent of Wharf, last week triggered an offer for a residential site in West Kowloon for the second time in two months.

The first site, whose sale was triggered in March, is up for sale today. Surveyors expected the site would fetch HK$4.88 billion.[South China Morning Post

Source:CE.cn 
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