Placings rush gives Hong Kong jitters

THERE are plenty of signs that share markets are getting toppy, and brokers often like to say one of the best is a rush of share placings. Unfortunately for

The latest affected Wing Hang Bank, the sixth-largest lender in a crowded banking sector. Its shares dropped HK$2.25 or 4.3% to HK$50.75 today after major shareholder Bank of New York placed 5% of the local unit's stock.

The placing - made at HK$50.615 a share - will leave BONY with a 20% holding and comes after Wing Hang hit a record high of HK$54.55 on Monday.

'The sale was initiated as part of the Bank of New York's continuing strategy of reallocating capital to its primary businesses,' the oldest lender in the United States said after the transaction was tied up.

Foreign lenders like to hold stakes in Hong Kong's smaller banking stocks despite the cut-throat competition for deposits and profits in the sector. The logic runs that further consolidation is inevitable, so a strategic holding yield rewards when a bidder with deep pockets knocks on the door.

But it seems that BONY is happy at this stage to take at least some of the gains that its stake can yield, while still holding on to a considerable portion of the equity. Brokers suggest that could signal the company's insiders may not believe there is much more upside to come - at least in the near term.

Hong Kong traders also point to Bank of China (Hong Kong), the local affiliate of the State-linked Bank of China. In December it placed more than one billion shares at HK$13.70 and then major shareholder Standard Chartered sold out its stake earlier this month for HK$14.75. The shares traded today at HK$14.70, off 10 cents or 0.7%.

The wider market was softer as investors started to take the outbreak of avian flu more seriously, clipping the Hang Seng index by 187.4 points or 1.4% to 13,574.48.

The backward step comes as the disease arrived in China and the World Health Organisation sounded a global alert amid fears the bug may become more deadly.

Although flag-carrier Cathay Pacific Airways says long-haul bookings have yet to be affected, its shares dipped 25 cents or 1.5% to HK$14.30.

The market's slip was also fuelled by profit-taking in developers and banks. Cheung Kong was off HK$2 at HK$74.50, down 2.6%. HSBC eased HK$ 1.50 or 1.2% to HK$121.50.

Caution ruled in Japan ahead of results from consumer electronics giant Sony, which came after the close. The market fell for a second day, off 20 yen or 0.5% to 4,310.

Rival Matsushita Electric Industrial was also marked lower - down 12 yen or 10.7% to 1603 - in a wider market that suffered jitters, again, about yen strength.

Despite raising its outlook for the year, chip-testing equipment maker Advantest slumped 410 yen or 4.5% to 8,810 after falls in US peers overnight. The Nikkei 225 closed 75.56 points lower at 10,852.47.

In Sydney, the market adjusted to a strategy shift from National Australia Bank, up 92 cents or 3.1% to A$30.37. The lender, troubled by a rogue-trading scandal, sold a trio of stakes, including a holding in AMP. The finance group slumped 16 cents or 3.5% to A$4.47. The All Ordinaries index declined 30.8 points or 0.9% to 3293.9.