Hong Kong Market Set For Higher Open

(RTTNews) - The Hong Kong stock market has finished lower now in back-to-back sessions and in five of the last six trading days, giving up more than 2,000 points along the way. The Hang Seng Index gave up support at 13,000 points, but analysts say the market is due for a correction to the upside when the market opens on Wednesday.

The global forecast for the Asian markets is fairly optimistic for the first time in nearly a week - but while many of the bourses have opened higher, they are proving unable to sustain the gains. Some better than expected corporate news helped to offset lingering concerns over a deep worldwide recession, as did some better than expected economic news out of the United States. Finally, many of the Asian markets are mired in substantial losing streaks and simply are due for correction, sinking to levels that are highly attractive to the bargain hunters.

The Hang Seng finished sharply lower again on Tuesday, as the financial stocks were under pressure throughout the session and posted significant losses. The commodities also took a big hit as the price of crude oil remained low, but the automotive stocks surprised by moving higher.

For the day, the index fell 613.64 points or 4.5 percent to close at 12,915.89 after trading between 12,676.28 and 13,363.57 on turnover of 44.8 billion Hong Kong dollars.

Among the decliners, Hong Kong Exchanges & Clearing fell 7.5 percent, while HSBC Holdings slid 3.6 percent, China Construction Bank was down 5.6 percent, PetroChina shed 3.6 percent and coal producer China Shenhua slid 6.9 percent. Finishing higher, Brilliance China Automotive jumped 9.8 percent and Geely Automobile Holdings rose 4.7 percent.

The lead from Wall Street is finally positive as stocks showed a lack of direction over the course of the trading day on Tuesday, with the major averages unable to sustain any significant moves on the heels of some mixed news. The markets eventually ended the day higher on some late-day strength.

In corporate news, computer and printer maker Hewlett-Packard (HPQ | Quote | Chart | News | PowerRating) forecast fourth quarter adjusted earnings and revenues above analyst estimates. The company said it expects to report adjusted earnings for the quarter of $1.03 per share on revenues of $33.6 billion.

Separately, Yahoo (YHOO | Quote | Chart | News | PowerRating) CEO Jerry Yang announced that he will step down from his position as soon as the Internet firm can find a replacement. Yang's tenure was recently marked by his refusal to sell the company to Microsoft (MSFT | Quote | Chart | News | PowerRating).

Nonetheless, while shares of HP and Yahoo responded positively to the news, the positive sentiment was partly offset by a warning from medical device maker Medtronic (MDT | Quote | Chart | News | PowerRating), which lowered its full year revenue guidance due in part to the negative impact of current exchange rates.

On the economic front, the Labor Department said that its producer price index fell 2.8 percent in October following a 0.4 percent decrease in September. The decrease marked the biggest one-month drop in prices since the government began recording the data in 1947. While economists had expected prices to show a notable decrease, they had been expecting a somewhat more modest 1.8 percent decrease in prices. However, excluding a 12.8 percent drop in energy prices as well as a 0.2 percent decrease in food prices, core producer prices increased by 0.4 percent in October, matching the increase that was seen in the previous month.

In other news, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke attempted to defend changes to the Troubled Asset Relief Program in testimony before the House Financial Services Committee

"The value of the TARP in promoting financial stability has already been demonstrated," Bernanke told the committee in prepared remarks. "There are some signs that credit markets, while still quite strained, are improving."

The major averages all ended the session in positive territory, although the tech-heavy Nasdaq posted only a modest gain. The Dow closed up 151.17 points or 1.8 percent at 8,424.75, the Nasdaq closed up 1.22 points or 0.1 percent at 1,483.27 and the S&P 500 closed up 8.36 points or 1.0 percent at 859.11.

In economic news, Hong Kong will on Wednesday announce its composite interest rate. There is a wide variety of forecasts for the rate, which currently stands at 1.18 percent, ranging from 0.75 to 1.50 percent.

Also, Hong Kong's seasonally-adjusted unemployment rate increased to 3.5 percent in the August to October period from 3.4 percent in the July to September period, a provisional report by the Census and Statistics Department said. Analysts expected the jobless rate to come in at 3.6 percent. The report said that this was the second consecutive period that the rate increased. However, the number of unemployed persons decreased to 131,800 in the August to October period from 134,000 in the previous three-month period.

In corporate news, China Cablecom Holdings Ltd. saw a third-quarter net loss of $4.5 million or $0.48 per share, the company said on Tuesday. Revenue for quarter was $9.4 million. For the nine-month period, the company reported a net loss of $9.6 million or $1.46 per share. Revenue for the period was $13.7 million. Looking ahead to the full year 2008, the company expects a net loss of $15.0 million.

Also, China RuiTai International Holdings Co., Ltd. announced that its third quarter net income was $1.7 million or $0.06 per share, compared to $0.7 million or $0.03 per share in the year ago quarter. Revenues for the quarter were $12.7 million, up 2.0 percent from $12.5 million in the third quarter of 2007. The company estimate that 2008 revenue and net income will be roughly the same compared to 2007.

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