HONG KONG (Thomson Financial) - Hong Kong shares rebounded from early session losses and closed higher on Thursday as bargain-hunters emerged from the sidelines after a four-day market decline.
Commodities led the index higher after a jump in oil prices revived interest in oil, metals and other resource stocks.
Buying sentiment was also bolstered late in the day by upbeat trade in European stock markets for the first time in four days, with the rise in commodity prices driving investors to snap up energy and mining stocks.
'Basically, bottom-fishing towards the close of the afternoon session boosted the market,' said Francis Lun, general manager at Fulbright Secruties. 'A lot of stocks have fallen sharply in the last few sessions. Commodities and even China Mobile are coming back.'
The Hang Seng Index edged up 99.39 points or 0.5 percent to end the day at 21,392.71, off a high of 21,453.48 and a low 21,109.01. The index recovered from a 0.1 percent drop at the midday close.
A total of HK$61.15 billion worth of shares were traded, down from Wednesday's HK$69.32 billion. Sentiment remained generally bearish, with most investors keeping to the sidelines while assessing at what level the market will stabilise.
'Turnover is still low and the tone is still cautious,' said Howard Gorges, vice chairman at China Everbright Securities. 'Most investors are caught between the summer and the Olympic Games.'
China's offshore oil producer CNOOC Ltd. rallied 7.5 percent to HK$11.20 after oil prices jumped to nearly $117 a barrel Thursday.
Jiangxi Copper advanced 6.7 percent to HK$11.18, while Aluminum Corp. of China surged 6.8 percent to HK$6.80. Coal producer China Shenhua Energy jumped 6.4 percent to HK$24.85. Gold miner Zijin Mining soared 11.7 percent to HK$5.05.
Index heavyweight China Mobile climbed 2.2 percent, erasing Wednesday's 1.8 percent loss.
Li & Fung slumped 7.6 percent to HK$24.20. The supplier of consumer goods to U.S. retailers on Wednesday said its first-half net profit rose 18 percent from a year ago.
It also announced the acquisition of Van Zeeland, a New York-based importer of handbags and the completion of outsourcing deals with Toys 'R'Us, Sanrio, Timberland and Kellwood.
Merrill Lynch trimmed its price target on Li & Fung by 10 percent to HK$22.19 and its 2008 profit forecast by 4 percent. Most analysts were expecting as much as 25 percent growth in Li & Fung's first-half profit, Merrill Lynch wrote.
'2008 is expected to see some margin drag from new outsourcing deals and acquisitions which will not be accretive until 2009,' Merrill Lynch said in a note to clients on Wednesday.
A decline in U.S. retail sales in July, the first in five months, further hurt sentiment for exporters.
Stock market operator Hong Kong Exchanges and Clearing Ltd. extended its 3.1 percent fall from Wednesday's trade and slid a further 2.4 percent to HK$101.00. It reported on Wednesday that its second-quarter net profit shrunk 6 percent from a year ago. JPMorgan cut its rating on the stock to 'neutral' from 'overweight' and its price target to HK$120 from $200.
Airlines were down on higher oil prices. Hong Kong's Cathay Pacific Airways lost 1.5 percent to HK$14.50.
China Life Insurance reversed its 0.7 percent drop in the morning session and closed up 1.7 percent to HK$27.70. The biggest insurer on the mainland said on Wednesday its unaudited premium income for the first seven months totaled 203 billion yuan ($25.6 billion). The company did not provide a year-ago figure.
Smaller rivals Ping An Insurance gained 1.3 percent to HK$48.30 and PICC Property and Casualty was 2.2 percent higher at HK$4.25.
Local developer Hang Lung Properties was up 2 percent at HK$24.15 after it reported on Wednesday that net profit more than doubled in the first half from a year ago to HK$13.16 billion.
Banks were mostly lower on fresh worries about the mortgage crisis after U.S. lender JPMorgan Chase this week warned of more losses from its subprime-related investments.
HSBC lost 1.1 percent to HK$125.40 and China Construction Bank fell 1.3 percent to HK$6.12.
($1 - HK$7.80)
jun.ebias@thomsonreuters.com . je/nt 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
