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Soft Open Expected For Hong Kong Stocks

(RTTNews) – The four-day winning streak has come to an end for the Hong Kong stock market, after it had collected more than 1,150 points or 5 percent en route to a 15-month closing high. The Hang Seng Index ended just below the 22,400-point plateau, and now investors are anticipating continued weakness when the market opens for business on Friday.

The global forecast for the Asian markets is firmly negative thanks to a decline in commodity prices – particularly gold and oil. Financials, properties and airlines also are expected to see some heavy selling. The European markets were little changed but mostly lower, while the U.S. bourses were firmly down – and the Asian markets are also tipped to trend to the downside.

The Hang Seng finished sharply lower on Thursday as investors locked in gains following the recent rally. Property stocks led the market to the downside, while the financials and insurance companies also ended under pressure.

For the day, the index shed 229.64 points or 1.01 percent to finish at 22,397.57 after trading between 22,359.09 and 22,707.36 on turnover of 70.95 billion Hong Kong dollars.

Among the decliners, HSBC shed 1.06 percent, while Wharf Holdings lost 3.7 percent, Sino Land lost 2.2 percent, Henderson Land fell 1.9 percent, Hong Kong Exchanges & Clearing lost 1.0 percent, China Life Insurance declined 1.54 percent, Ping An Insurance eased 0.48 percent, PICC Property & Casualty lost 1.66 percent, Zijin Mining Group shed 1.31 percent, Zhaojin Mining Industry fell 0.55 percent and Lingbao Gold dropped 1.32 percent.

Finishing higher, Citic Pacific surged 9.1 percent, while Bank of East Asia added 2.1 percent and Sino Gold Mining was up 1.82 percent.

The lead from Wall Street is decidedly soft as stocks fell by considerable margins on Thursday, despite the day’s better-than-expected jobs data and further signs of life on the M&A front. The major averages all moved lower, more than offsetting Wednesday’s moderate rally.

The pullback on the day came even though statistics from the Labor Department showed that first time claims for unemployment benefits fell by more than expected in the week ended November 7.

Initial jobless claims fell to 502,000 from the previous week’s revised figure of 514,000. Economists had been expecting claims to edge down to 510,000 from the 512,000 originally reported for the previous week. Analysts have pointed out that while the data continues to signal a moderation in the pace of job losses, there remains some uncertainty about the level of hiring.

In corporate news, Hewlett-Packard (HPQ) has agreed to acquire communications equipment maker 3Com (COMS). HP will purchase 3Com for $7.90 per share in cash or a total of about $2.7 billion. Shares of 3Com rallied on the news while HP saw modest weakness.

Also in tech news, Advanced Micro Devices (AMD) announced an agreement with Intel (INTC) to end all outstanding legal disputes between the companies. The deal includes a five-year cross license agreement and a payment of $1.25 billion to AMD from Intel.

Further, diversified conglomerates General Electric Co. (GE) and United Technologies Corp. (UTX) announced the signing of a definitive deal under which United Technologies will acquire GE’s Security business for $1.82 billion.

The major averages moved off their worst levels of the day going into the close, although they still posted sizeable losses. The Dow fell by 93.79 points or 0.9 percent to 10,197.47, the NASDAQ dropped by 17.88 points or 0.8 percent to 2,149.02 and the S&P 500 closed down by 11.27 points or 1 percent to close at 1,087.24.

In economic news, Hong Kong will on Friday provide third quarter numbers for gross domestic product. Analysts are expecting GDP to decline 1.5 percent on year following the 3.8 percent annual contraction in the second quarter.

Also, China will continue its active fiscal policy and loose monetary policy measures as the economy is still facing some difficulties, Premier Wen Jiabao reiterated on Thursday.

Wen said the worst of the financial crisis is over now and the global economic recovery would be gradual and bumpy. The Chinese economy expanded 8.9 percent year-on-year in the third quarter after growing by 7.9 percent in the previous quarter.

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