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November 26, 2009

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Investors on prowl for HK bargains

SHARES in Hong Kong erased earlier losses to end higher yesterday, led by insurers and resource shares, as investors sought bargains after a sell-off in the previous session.

But the Bank of China continued to fall in Hong Kong after possible capital-raising plans sparked fears of shareholder dilution.

Investors took some solace from strong debuts by coal mining equipment maker Sany Heavy Equipment and property developer Fantasia Holdings.

The benchmark Hang Seng Index closed up 0.84 percent, or 188.66 points, at 22,611.80. Turnover was HK$79.4 billion (US$10.25 billion), higher than Tuesday's HK$67.1 billion.

"Momentum is weak," said Peter Lai, director at DBS Vickers. "By year end, there'll be lots of profit-taking. People are looking for any catalyst to take profits."

The Bank of China fell as much as 4.8 percent during the morning to a three-week low of HK$4.40, extending a 4 percent loss on Tuesday. The stock closed at HK$4.48, down 3 percent.

But brokers said the sell-off in the Chinese mainland lenders in the past two days was overdone.

"The market lacks clear direction and Hong Kong investors remain concerned about potential fundraising from mainland banks," said Ben Kwong, chief operating officer at KGI Asia. "But the impact may diminish after a period of time if no further action is taken."

China Life and Esprit Holdings led gains in the index. China Life rose 4.5 percent to HK$40.70, while Esprit gained 4 percent to HK$56.70.

Chinese property developer Fantasia Holdings rose 10 percent on its market debut in active trade before trimming gains, after the company priced its Hong Kong initial public offering near the top end of an indicative range.

Fantasia, which raised US$410 million in its IPO, closed at HK$2.23, 2.3 percent higher than its IPO price of HK$2.18, after slipping from its open at HK$2.40.

Sany Heavy Equipment jumped 27 percent on its first day of trade and was the most actively traded stock in Hong Kong, as investors bought into the IPO to gain exposure to China's growing demand for coal. Sany closed at HK$7.03, 46.5 percent higher than its IPO price of HK$4.80.


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