Weighing Hutch's options as 3G hits

WHICH respected

The answer is Hutchison Whampoa, listed flagship of Asia's richest man, Li Ka-shing. And the reason, analysts say, is the complex and costly bet that Li has laid on the future of third-generation (3G) mobile telephony, including fledgling services in Britain.

Hutchison shares climbed 25 cents or 0.5% to HK$57.25 today as the wider market strengthened. But stock-watchers say the key to the medium-term outlook for the ports-to-telecoms group lies in the string of corporate moves Li and his lieutenants are likely to make to raise the dollars needed to offset 3G startup costs. It promises to be a delicate and interesting balancing act.

JP Morgan said in a note that for Hutch to maintain earnings per share at this year's levels it would need to raise HK$6bn (£488m) next year and HK$7 billion the year after that. The bank said Li was looking at listing his Indian telecoms operations or those in Hong Kong.

Flogging off Canadian oil company Husky Energy was a third option, while listing some of Hutch's extensive property assets was a fourth.

While the sums needed are dramatic, the timetable is less so. JP Morgan said Hutchison already had enough cash in the kitty to tide itself over this year, so 'it can wait until the first half of 2004 in order to book the exceptional gains'.

The bank, which has a neutral rating on Hutchison, said Li would probably list Indian telecoms first, bagging HK$4 billion, then opt for a retail property REIT (real-estate investment option), snaring HK$7bn. Husky could go on the block late next year, possibly raising as much as HK$9 billion.

Separately today Li's media outfit Tom.com said it was considering a spin-off for some of its internet assets. Its shares gained 7.5 cents or 2.3% at HK$2.325.

Among blue-chips, telecoms group Pacific Century Cyberworks dropped 10 cents or 2.1% to HK$4.50 after interim results disappointed. The Hang Seng index rose 101.74 points or 1% to 10,861.86.

In Japan stocks ticked higher after two days of losses, with gains underpinned by positive macro-economic data. Amid hopes that the economy may at last be strengthening the Nikkei 225 gained 101.74 points to close at 10,343.55.

Buoyed by the local optimism and the gain on Wall Street, electronics component maker Kyocera led the market upwards. Its shares firmed 210 yen or 2.9% to 7930. Automobile and electrical parts maker Denso was also lifted, rising 100 yen or 4.8% to 2185 yen.

Banks, however, suffered profit-taking after recent strong gains. Mizuho Financial dropped back 200 yen or 1.5% to 143,000.

Australian miner BHP Billiton enjoyed a boost from a 75% jump in fourth-quarter earnings to A$545m (£221m). It put on two cents or 0.2% at A$10.90 in Sydney. Financial group AMP, targeted for stakebuilding by National Australia Bank, made further progress as dealers saw an eventual bid. AMP stock climbed 15 cents or 2.4% to A$6.50, comfortably ahead of the A$6 at which NAB was picking up shares. NAB itself shed 34 cents or 1% to A$31.01. The All Ordinaries index rose six points to 3202.9, or 0.19%.