(Forbes, Oct 23, 2006)--Share prices were higher in early trade on the back of fresh fund inflows and a drop in oil prices to a 11-month low below 57 usd a barrel, dealers said.

They said the upside is being capped by caution ahead of the two-day US Federal Reserve policy meeting which will begin tomorrow.

At 10.27 am, the Hang Seng Index was up 34.04 points or 0.19 pct at 18,147.59, off a low of 18,138.44 and high of 18,170.33.

Turnover was 6.32 bln hkd.

'Liquidity in the market is much stronger than we expected. Fund flow has been strong despite ICBC's share offering,' said Philip Chan, research head at CSC Securities

ICBC announced that it has priced its initial public offerings in Shanghai and Hong Kong at the top end of the indicated ranges, with the A-shares priced at 3.12 yuan and H-shares at 3.07 hkd. The lender will raise a record 19.1 bln usd from the share sale, excluding the over-allotment option.

Chan said China Mobile was in focus after the company reported strong nine months to September results.

China Mobile announced on Friday that its net profit for the nine months to September rose 25.1 pct to 46.13 bln yuan from 36.86 bln a year ago.

Operating revenue reached 212.69 bln yuan, up 20.8 pct year-on-year.

'China Mobile in the past two years has surprised on the upside as far as third and fourth quarter results are concerned. The market is expecting that China Mobile will stage another strong fourth quarter results this year,' Chan said.

China Mobile was up 0.20 hkd or 0.34 pct at 59.30.

Chan said property-related stocks are being watched ahead of the US Federal Reserve decision on interest rates. The Fed, which will announce its decision on Wednesday, is expected to leave rates on hold, according to most analysts.

The property sub-index was down 70.55 points or 0.34 pct at 20,978.41, with Cheung Kong flat at 85.25, Sun Hung Kai down 0.20 hkd or 0.23 pct at 85.20 and Henderson Land down 0.35 hkd or 0.80 pct at 43.45.

Wharf was up 0.15 hkd or 0.57 pct at 26.25 and Wheelock was unchanged at 14.10 hkd following reports the companies will revive their Diamond real estate investment trust which aims to raise about 5 bln hkd in an initial public offering.

Among banks, HSBC was unchanged at 147.20, Hang Seng Bank flat at 99.0 hkd and Bank of East Asia was down 0.30 hkd or 0.78 pct at 48.30.

Yue Yuen Industrial was sharply lower 0.75 hkd or 3.13 pct at 23.25 on resuming trade after announcing a share placement and issue of convertible bonds.

The company expects to raise up to 3.075 bln hkd in net proceeds from sale of new shares and convertible bonds, which will be used to repay debt and fund business expansion.

Orient Overseas was up 0.30 hkd or 0.94 pct at 32.10 after news that it has placed orders for construction of four vessels worth 477 mln usd.

Chan said the drop in oil prices helped lift airline stocks, including Cathay Pacific which was up 0.20 hkd or 1.20 pct at 16.88 and China Southern Airline which rose 0.06 hkd or 2.53 pct to 2.43.

Air China gained 0.10 hkd or 2.88 pct to 3.57 and China Eastern Airline was up 0.03 hkd or 2.19 pct at 1.40.

Oil stocks were mostly lower, with CNOOC down 0.02 hkd or 0.31 pct at 6.46, PetroChina down 0.07 hkd or 0.81 pct at 8.56 and Sinopec down 0.03 hkd or 0.39 pct at 5.16.

(1 usd = 7.8 hkd)

Source:Forbes
tag:China economy