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Wednesday December 27, 3:26 PMHK stocks hit records on Chinese corporate tax hopesHONG KONG, Dec 27 (Reuters) - Hong Kong stocks rose in post-Christmas trade on Wednesday, catching up with gains in China's domestic markets in the past two days following news that the country may unify its corporate tax system in 2007.The benchmark Hang Seng index rose 1.53 percent to 19,615.39 in afternoon trade after hitting a record of 19,665.16, fuelled by Chinese telecom and financial stocks. China Netcom rose 21 percent to HK$23.60 after touching a new high of HK$24.0 and China Unicom advanced 6.6 percent to HK$11.26 on hopes that they will benefit from the possible change of China's tax system. "There are talks that the new tax rate will be 25 percent and that should help companies such as China Netcom, which is now paying 30 percent to 33 percent," said Samuel Chua, an analyst at KGI Asia. China plans to set a unified corporate income tax rate of 25 percent in a move that will scrap the country's decade-old preferential treatment for foreign firms, the official China Securities Journal said on Monday. The rate was laid out in a draft law under consideration by the country's parliament and if approved, it could be introduced in 2007, the paper said. Hong Kong-listed Chinese companies, or H-shares , rose as much as 6.7 percent to a record of 10,239.73 before easing slightly to 10,189.30, up 6.22 percent. Chinese financial stocks are also tipped as winners in the possible new tax system with China Construction Bank rising 9.09 percent to HK$5.03 and Bank of China up 4.1 percent at HK$4.07. Industrial and Commercial Bank of China jumped nearly 12 percent to HK$4.92 after the nation's largest lender said its non-performing debt will stand below 3.9 percent of total loans at the end of this year. Brokers say the recent market rally is driven by liquidity as plenty of hot money is waiting to buy initial public offering stocks in Hong Kong and in mainland China but the market may need a consolidation this month or in January. "There is not much room on the upside after the recent rally and the market needs to digest the gains," said Alfred Chan, chief dealer at Cheer Pearl Investment Ltd. He expected the blue chip index to move in a 300-point-range around 19,600 for the rest of the year. Oil related Chinese stocks were also higher. Petrochina rose 5.01 percent to HK$10.92 after hitting a high of HK$11.0, helped by the corporate tax news and hopes that the company would list its shares in the mainland next year. Sinpoec shares gained 3.27 percent to HK$6.94. The oil refiner, the largest in Asia, said on Wednesday it had received 5 billion yuan ($639.4 million) in compensation from the government for refining losses this year. Hong Kong tycoon Li Ka-shing's Hutchison Telecommunications International jumped more than 10 percent to an all-time high of HK$20.25 but gains were pared to 1.31 percent to HK$18.52. India's Essar group has made an offer to buy Hutchison Telecom's 67 percent stake in mobile phone operator Hutchison Essar at an estimated enterprise value of $17-18 billion, said India's Economic Times on Wednesday. Hutchison Telecom is a unit of port-to-telecom conglomerate Hutchison Whampoa , which added 1.16 percent to HK$78.70. (US$1=HK$7.8) |
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