Rate Cut Hopes Lift HK Stocks

123jump.com Staff
28 Feb, 2008
New York City

Hopes of yet another rate cut in the U.S. sparked a rally in Hong Kong stocks. The Fed chairman Ben Bernanke comments were interpreted as a possible rate cut if the economy remains weak. Property stocks and banks rallied on the prospect of lower interest rates. Separately, telecom fees fell 13.6% in 2007 and fell 53% in five years according to the Ministry of Telecom. Weak U.S. dollar lifted stocks of commodities companies. Dollar fell to a record low against euro and Asian currencies.

[R]6:00AM New York, 6:00PM Hong Kong – Hong Kong stocks advanced on the hopes of yet another rate cut in the U.S.[/R]

Stocks in Hong Kong rose as U.S. economic woes stoked expectations that the U.S. Federal Reserve will cut its key rate. A retreating dollar also boosted the attractiveness of commodity stocks.

In Hong Kong trading the Hang Seng Index rose 0.4% to 24,591.69, and the China Enterprises Index of Hong Kong-listed mainland companies, or H shares, gained 0.7% at 14,039.98.

Daily turnover on main-board was HK$82.4 billion compared to HK$99.4 billion yesterday.

U.S. to act on rising risks

The U.S. Federal Reserve Chairman Ben Bernanke told Congress yesterday that monetary authorities were prepared to act in a timely manner in order to forestall the adverse effects of rising inflation and slowing economic growth. Investors interpreted these comments as a hint for future rate cuts and left dollar at a new low against euro.

IPO activity increases

The Standard news reported today that two companies Xingfa Aluminium and Bio Beauty Group are planning to list in Hong Kong in March in the wake of improved sentiment for IPOs.

Xingfa Aluminium is planning to raise US$100 million from the issue of not less than 100 million shares, while Bio Beauty Group will also resume its retail offering in late March after suspending it in December.

Telecommunications fees drop

The deputy minister of the Ministry of Information Industry Jiang Yaoping announced at the 2008 annual meeting of telecommunication services that the telecommunication fees fell by 13.6% from a year ago in 2007.

Yaoping added that the level of telecommunication fees has been lowered by 53% in five years.

Recently, the ministry and National Development and Reform Commission jointly announced a price cut on mobile roaming service charges by between 54 % and 73%.


Gainers & Losers

Property stocks in Hong Kong were mainly active after the U.S. Federal Reserve Chairman Ben Bernanke intimated in a speech to Congress yesterday that the monetary authorities were prepared to timely deal with risks to the economy, fueling speculation of another rate cut.

Sun Hung Kai Properties gained 2.3% to HK$142 and Cheung Kong Ltd rose 1.3% to HK$119.90.

Commodity stocks increased as metal remained attractive as the dollars continue to slide. Aluminum Corp of China, surged 1.8% to HK$16.08 after inventories fell. Zinc producer Hunan Nonferrous Metals Corp Ltd increased 3.8% to HK$3.84.

Sinopec jumped 3%to HK$9.02 on news that the company will receive subsidies from the government as oil prices continue rising.

Ping An Insurance advanced 1.5% to HK$61.5 on speculation that it will review its controversial multi-billion dollar fund-raising plan that is being criticized by regulators and investors.

China Life rose 1% to HK$31.80 and China Merchants Bank edged up 3.1% to HK$27.95.

Acer to acquire Packard

The People’s Daily Online reported today that Taiwan-based Acer won approval from the European Union on Wednesday to buy the Dutch-based company Packard Bell.

The commission however said the proposed merger will entail horizontal overlaps for desktops and laptops, the market would remain competitive with established alternative suppliers such as Hewlett-Packard, Dell, Fujitsu-Siemens, Toshiba, Sony and Lenovo.