HONG KONG, Aug 29 (Reuters) - Hong Kong shares rose 1.9 percent on Friday, staging a strong rebound from the previous session's sell-off, after data showed the U.S. economy grew at a surprisingly strong clip in the second quarter.
But CLP Holdings <0002.HK> fell 3.9 percent after Hong Kong signed a memorandum of understanding with China on natural gas supply, threatening the need for an LNG terminal project that the city's largest power utility was bidding to build.
Credit Suisse downgraded CLP to neutral from outperform and cut its target price on the stock to HK$73 from HK$81, saying the memorandum implied a lower chance of CLP winning the LNG terminal project.
Despite Friday's rally, analysts said uncertainty over health of the world's largest economy would continue to haunt the local market.
'In the second quarter the (U.S.) economy got a lot of help including the stimulus package from the government and a weak dollar which boosted exports,' said Patrick Shum, strategist with Karl Thomson Securities.
'But with the dollar on a rebound economic growth will slow down again in the third quarter,' he said.
The benchmark Hang Seng Index <.HSI> ended the morning session up 390.09 points at 21,362.38.
Mainboard turnover rose to HK$34.6 billion ($4.4 billion) from HK$33.7 billion at mid-day on Thursday.
The blue-chip index is still seen trending towards a near two-year low of 18,000 points and not the 24,000 breakthrough level local investors have been seeking, analysts said.
China Mobile <0941.HK> continued to languish after being battered by a slew of broker downgrades on Thursday.
The stock slipped 0.7 percent, adding to its 6.3 percent fall in the previous session as investors stayed focused on looming uncertainties in the Chinese telecom sector.
The other index heavyweight, HSBC Holdings <0005.HK>, advanced 2.6 percent.
Property counters were the other big gainers on Friday, with Hong Kong's largest developer Sun Hung Kai Properties <0016.HK> jumping 3.6 percent while Cheung Kong Holdings <0001.HK> rose 3 percent.
The China Enterprises Index <.HSCE> of top locally listed mainland Chinese firms climbed 2.3 percent.
Bank of China <3988.HK>, the nation's flagship foreign exchange lender, jumped 2.4 percent after posting a forecast-beating 15 percent increase in its first half net profit.
UBS upgraded the stock to buy from neutral, taking into consideration the continued decline in its share price.
BOC's bigger rival China Construction Bank <0939.HK> gained 2.1 percent while China's biggest lender ICBC <1398.HK> climbed 1.9 percent.
But shares in Bank of China Hong Kong <2388.HK> fell 3.7 percent after Morgan Stanley downgraded the stock to underweight from equal-weight, citing huge uncertainties in its investment book, weak core earnings and low capital efficiency.
Morgan Stanley said it cut its target price on the Chinese bank to HK$15.50 from HK$17 after it posted a 5 percent year-on-year drop in earnings due mainly to large losses on its investment book, especially on U.S. prime and subprime mortgages.
Top insurer China Life <2628.HK> was up 2 percent, tracking a 1.2 percent jump on the Shanghai bourse.
(Reporting by Parvathy Ullatil; Editing by Jonathan Hopfner) . ng COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
But CLP Holdings <0002.HK> fell 3.9 percent after Hong Kong signed a memorandum of understanding with China on natural gas supply, threatening the need for an LNG terminal project that the city's largest power utility was bidding to build.
Credit Suisse downgraded CLP to neutral from outperform and cut its target price on the stock to HK$73 from HK$81, saying the memorandum implied a lower chance of CLP winning the LNG terminal project.
Despite Friday's rally, analysts said uncertainty over health of the world's largest economy would continue to haunt the local market.
'In the second quarter the (U.S.) economy got a lot of help including the stimulus package from the government and a weak dollar which boosted exports,' said Patrick Shum, strategist with Karl Thomson Securities.
'But with the dollar on a rebound economic growth will slow down again in the third quarter,' he said.
The benchmark Hang Seng Index <.HSI> ended the morning session up 390.09 points at 21,362.38.
Mainboard turnover rose to HK$34.6 billion ($4.4 billion) from HK$33.7 billion at mid-day on Thursday.
The blue-chip index is still seen trending towards a near two-year low of 18,000 points and not the 24,000 breakthrough level local investors have been seeking, analysts said.
China Mobile <0941.HK> continued to languish after being battered by a slew of broker downgrades on Thursday.
The stock slipped 0.7 percent, adding to its 6.3 percent fall in the previous session as investors stayed focused on looming uncertainties in the Chinese telecom sector.
The other index heavyweight, HSBC Holdings <0005.HK>, advanced 2.6 percent.
Property counters were the other big gainers on Friday, with Hong Kong's largest developer Sun Hung Kai Properties <0016.HK> jumping 3.6 percent while Cheung Kong Holdings <0001.HK> rose 3 percent.
The China Enterprises Index <.HSCE> of top locally listed mainland Chinese firms climbed 2.3 percent.
Bank of China <3988.HK>, the nation's flagship foreign exchange lender, jumped 2.4 percent after posting a forecast-beating 15 percent increase in its first half net profit.
UBS upgraded the stock to buy from neutral, taking into consideration the continued decline in its share price.
BOC's bigger rival China Construction Bank <0939.HK> gained 2.1 percent while China's biggest lender ICBC <1398.HK> climbed 1.9 percent.
But shares in Bank of China Hong Kong <2388.HK> fell 3.7 percent after Morgan Stanley downgraded the stock to underweight from equal-weight, citing huge uncertainties in its investment book, weak core earnings and low capital efficiency.
Morgan Stanley said it cut its target price on the Chinese bank to HK$15.50 from HK$17 after it posted a 5 percent year-on-year drop in earnings due mainly to large losses on its investment book, especially on U.S. prime and subprime mortgages.
Top insurer China Life <2628.HK> was up 2 percent, tracking a 1.2 percent jump on the Shanghai bourse.
(Reporting by Parvathy Ullatil; Editing by Jonathan Hopfner) . ng COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
© 2008 AFX News
