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September 29, 2009

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HK shares reach 3-week low

HONG Kong stocks fell to a three-week closing low yesterday, dragged down by telecoms after a late tumble by Chinese mainland shares prompted skittish investors to lock in profit, and as weak United States housing data raised doubts about the strength of the global recovery.

Optimism about an easing global recession had helped the Hong Kong stock market skim one-year highs in the past two weeks, but some investors questioned the strength of the rally, saying the market had run ahead of itself.

"There's nothing to latch on to now," said Howard Gorges, a director at South China Brokerage. "We've clearly entered a phase of profit-taking after the good run."

The benchmark index fell to as low as 20,534.82, before trimming losses to 20,588.41 at the close of trade, down 2.07 percent from the previous close. Turnover was HK$50.9 billion (US$6.57 billion), compared with Friday's HK$56.41 billion.

Correction soon

"The outlook is quite negative," said Peter Lai, a director with DBS Vickers, citing weak US economic data. "The Hang Seng Index has been overbought in the last few weeks and I expect some sort of correction to come soon."

The China Enterprises Index, which tracks top locally listed mainland stocks, was down 2.52 percent at 11,752.65.

DBS's Lai predicted the index could fall to 19,800 in the coming weeks and below 18,000 in the coming quarter.

Lighting manufacturer Bright International Group Ltd surged as much as 29 percent after the company said it would buy gold mines on China's mainland for a total of HK$7.41 billion to tap rising prices. The stock's gains later eased to trade up 4.55 percent at HK$0.69.

Huscoke Resources climbed as much as 22.5 percent to a near nine-month high of HK$0.60 after the company swung to a first-half net profit of HK$20.2 million on soaring revenue from its coal business. The stock closed up 10.2 percent at HK$0.54.

PetroChina, Asia's top oil and gas producer, fell 2.88 percent to HK$8.75, while China's top offshore oil producer CNOOC Ltd dropped 0.8 percent to HK$10.30 as crude oil slipped below US$66 per barrel.


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