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HK stages late recovery
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May 3, 1999: 5:33 a.m. ET
Hang Seng reverses course to scrape into the black, Tokyo closed
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LONDON (CNNfn) - Hong Kong refused to buckle Monday, as blue chips staged an afternoon rally to end the session just in the black. Asia's other markets were mostly higher despite the absence of guidance from Tokyo.
Tokyo, the region's largest market, was closed Monday at the start of a three day public holiday.
Concerns over the valuation of blue chips initially hit the Hang Seng in Hong Kong, which was over 1 percent lower until buyers returned to the market in the afternoon. The leading index just made it into the plus column by the close, to finish up 3.87 points at 13,337.07.
Stocks have had a strong run recently but a growing number of analysts have voiced concerns about the lack of fundamentals to sustain the bull run.
"Major blue chips have risen so much recently and they look expensive relative to the Hong Kong economy," Sean Li, associate director at Amsteel Securities told Reuters.
An after-market interest rate cut Friday eventually overrode the negative early start - the territory's banks dropped the key short term borrowing rate by a quarter of a percentage point to 8.25 percent.
One analysts said strength from other regional markets helped pull the Hang Seng back up. "Regional markets are higher in the afternoon which helped the Hong Kong market up," Alex Wong, research manager at OSK Securities told Reuters.
Index heavyweight HSBC Holdings closed HK$2 lower at HK$286, while Swire Pacific enjoyed a strong session to finish up 3.2 percent at HK$44.90.
In Seoul, the Kospi also staged a recovery. South Korean blue chips reversed a sharp 2 percent decline by mid-afternoon to end 0.52 percent higher at 756.53. Investors were unnerved initially by a comment from a central bank official that interest rates were falling too fast and distorting the local equity and currency markets. Continued labor unrest also played on sentiment.
Singapore's blue chips benefited from some late buying to round off a fairly lackluster session. The Straits Times index ended up 0.64 percent at 1,898.24 in late trade.
Australian stocks took their cue from the Dow's fall Friday, as the All Ordinaries ended down 27 points at 3,074.5. Resource stocks again bucked the trend, with investors continuing their buying spree in mining companies on the back of a stronger currency and generally better commodity prices.
The smaller Asian markets were higher. Taiwan's blue chips closed up 12 points at 7,383.26, while Manila's Composite added 0.54 percent to 2,446.74.
Kuala Lumpur closed up 0.44 percent at 677.93, while Indonesian stocks soared over 6 percent to 518.82. Thailand's market was closed.
-- from staff and wire reports
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