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HK shares at 5-mth high on retail, property rally; IPOs eyed

Published 09/22/2010, 04:55 AM
Updated 09/22/2010, 05:00 AM
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* HSI up 0.2 percent, resistance seen at April peak

* Consumer-related plays rally on holiday spending hopes

* Property plays rise, Swire Pacific hits 32-month high

* IPO performance eyed for further market direction: analysts

* China Unicom falls 3.3 percent on Deutsche Bank downgrade (Updates to close)

By Vikram S.Subhedar

HONG KONG, Sept 22 (Reuters) - Hong Kong stocks rose on Wednesday to a five-month high, with consumer-related plays gaining ground ahead of China's "golden week" holiday and local property issues extending recent gains.

The benchmark Hang Seng Index closed up 0.2 percent at 22,047.7, just over a percent below its peak for the year reached in April, which is seen by analysts as the next key resistance.

But with the index up 8 percent this month and trading well into technically overbought territory according to the relative strength index (RSI), currently above 73, it could struggle to touch a new year-high.

The last time the RSI was around this level in August, the index fell about 7 percent to a one-month low.

"We could see some consolidation at these levels after this fairly strong rally," said Mark To of Wing Wung Financial Group.

"The performance of all the upcoming IPOs will be important to watch. If they do well, that might push the market higher."

Since the beginning of September, at least 15 companies have launched IPOs in Hong Kong to raise a total of around $4.5 billion as market conditions improved.

The IPOs have seen strong demand, mostly from retail investors looking for quick listing gains.

Magic Holdings, a maker of Chinese facial masks which priced its offering at the top end of it range, said in a statement its Hong Kong IPO was subscribed 786 times. The shares will start trading on Sept 24.

American International Group Inc inched closer to its ambitious plan to list Asian unit AIA Group after securing approval from the Hong Kong stock exchange.

RETAILERS, PROPERTY SHARES RALLY

Local property counters extended recent gains with investors increasingly optimistic that commercial and retail demand for Hong Kong real estate will remain robust.

Conglomerates that operate large commercial properties in Hong Kong rose on healthy volumes.

Swire Pacific rose 1.7 percent on more than 3 times its average 30-day volume, while Wharf Ltd was up 2.1 percent. Wharf, trading at an all-time high, is the month's top performer on the Hang Seng Index, up more than 22 percent.

Local developers also gained with Henderson Land up 2.6 percent and Cheung Kong Holdings, up 2.1 percent.

Credit Suisse, in a note to clients on Tuesday, recommended that investors continue to switch out of utilities and into Hong Kong property plays.

Footwear retailer Belle International Holdings Ltd was up 4.5 percent, leading a rally in consumer-related plays.

"The National Day holiday will give a strong boost to retail sales," Dongliang Chang, analyst at China Everbright Research, said in a note to clients.

He added that although discounts may slightly compress margins at department stores, doubling or even tripling sales during the holiday would largely offset that impact.

China Unicom fell 3.3 percent and was the top losers on the Hang Seng Index after Deutsche Bank downgraded the stock to "sell" from "buy" on the company's inability to ramp up subscriber additions despite increasing promotional activity.

The brokerage also cut its long-term forecast for 3G subscribers, a key growth area for China Unicom.

Trading activity tapered out into the close with turnover for the day at its lowest this month ahead of the Mid-Autumn Festival holiday in Hong Kong on Thursday. Markets will reopen on Friday.

Mainland China's markets are closed Sept. 22-24, Oct. 1 and Oct. 4-7..

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