Global Volatility Leaves Hong Kong Feeling Sick

Sunday Business (London, England), September 24, 2000 | Go to article overview
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Global Volatility Leaves Hong Kong Feeling Sick


H

IGH oil prices or low sentiment? Which rules Asian bourses? Hong Kong's market came to a bruising, wok 'n' roll close on Friday afternoon after losing 10% of its value in a week.

But that's nothing compared with the wounds being carried by some individual companies.

Legend Holdings lost 26%, China Mobile dropped 15%, China Resources fell 14% and Shanghai Industrial had 12% erased from its market value.

Even a solid widget-maker like Johnson Electric lost 12%. Solid performers of late, such as the banks, suffered an average decline of 4%, while glamour stocks such as Hutchison Whampoa suffered similar losses.

Then, there's Pacific Century CyberWorks (PCCW). Richard Li's flagship lost 25% over the week, its decline exacerbated by Cable & Wireless's sale of a 4.9% stake at a deep discount. At HK$8.75 (87p), the shares barely cover the value of Hong Kong Telecom, which the company finally took under its wing just last month.

I suspect it's a good time to buy PCCW because Li and his fellow directors emerge from a closed period on Thursday when interim results are announced.

That means he'll be back in there - hopefully with his father, Li Ka-shing - buying on his own account or initiating some company buy-backs.

Indeed, Li has a moral obligation to be in there supporting that share price because his slip last month triggered the downward spiral.

He sold 1% of the company at HK$15.80 a share to net HK$3.8bn. The market threw a fit because the deal was not announced officially for 36 hours. Well, now is the time to put some of that profit back and inject a bit of life into the company.

To be fair, what really finished off markets here on Friday was a profits warning from Intel. This seemed as good a reason as any to sell stocks right around the region, with South Korea off 7%, Taiwan down 4.5% and Tokyo losing 3%.

This week is expected to kick-off more cheerfully. A calm performance on Wall Street on Friday should help boost spirits. That, combined with Bill Clinton's decision to release 30m barrels of oil from US government emergency stockpiles should sooth nerves frayed by fuel prices hitting a 10-year high last week.

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