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Hong Kong leaps on rate cuts
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December 7, 1998: 6:09 a.m. ET
Hang Seng surges 4.67 percent; Singapore climbs 1.45 percent while Tokyo trails
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LONDON (CNNfn) - Hong Kong stocks surged almost 5 percent Monday as interest rate cuts by local banks and China's central bank inspired the market.
Wall Street's rally Friday also boosted shares. The 4.67 percent rise in Hong Kong overshadowed Singapore's 1.45 percent climb. Tokyo was left trailing with a 0.57 percent gain.
Korea was the pick of the bunch, adding 4.85 percent by its close. Indonesia finished almost 2.5 percent up, Taiwan finished 1.4 percent higher while Australia moved almost 1 percent ahead. The Philippines was right behind.
Malaysian stocks lost more than 2 percent. Thailand was closed.
A 25 basis point cut in Hong Kong interest rates Friday was followed by an average 50 basis point cut Sunday by the Chinese central bank.
The cuts sent Hong Kong stocks sharply higher. The blue-chip Hang Seng index soared 465.68 points to 10,428.82.
Banks and property-related stocks were again the major beneficiaries, with both climbing about 5.5 percent. HSBC Holdings leaped 5.4 percent to HK$196, recovering much of its loss from last week.
New World Development jumped 5.6 percent to HK$19.95 while Sun Hung Kai Properties was up 5.88 percent to HK$58.5. Cheung Kong stormed ahead 6.1 percent to Hk$56.5.
The combination of local and mainland rate cuts gave China-related stocks a shot in the arm. Red chips (Hong Kong-owned companies with direct mainland connections) jumped 4.5 percent. H shares (mainland companies listed in Hong Kong) rose 3.5 percent.
With liquidity a problem among China-related stocks, it was the most liquid, China Resources, that performed best. It was up 7 percent.
"It was interest rates, America and property sales today" said South China Brokerage Douglas Hanson-Luke. "Hong Kong responded more to the cut in the prime lending on Friday than on the PRC (China) rate cut."
Tokyo's benchmark Nikkei average finished 83.52 points higher at 14,723.49 in quiet trade. The imminent offering of up to one million government-held shares of Nippon Telegraph and Telephone Corp. also dampened buying enthusiasm.
"There were no major changes today," said Lehman Brothers analyst Nozomu Kunishige. "The market and bank stocks remain stable. There was no major news during the weekend."
Stocks were quiet across the board. The best- performing sector was pulp and paper which climbed a modest 2.49 percent. The worst was transport equipment where stocks posted a fall of just 0.64 percent.
Banks as a whole climbed 0.62 percent. Sanwa Bank was among the best performers, rising 2.8 percent to 1,100 yen. Auto maker Honda Motor eased 0.7 percent to 4,250 yen.
Singapore stocks added 19.69 points to 1,376.82.
Australia closed 0.93 percent higher, while the Philippines finished up 0.64 percent. Taiwan jumped 1.41 percent but Korea outdid them all, surging 4.85 percent by the close of play in Seoul.
Bill Hunsaker, ING Barings head of equity research in Seoul, said "restructuring fever" among the country's dominant corporate groups helped boost the market. An investment grade rating for a won-denominated bond from Moody's also helped.
The KOPSI index posted similar gains Saturday, the last day of weekend trading in Korea.
"The market has run up basically 9 percent in the last two days," said Hunsaker.
Indonesia jumped 2.32 percent but Malaysia was off 2.37 percent. Thailand was closed. 
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