HK stocks down by midday, telcos hit by Nortel


(Updates with midday levels)

HONG KONG, Aug 29 (Reuters) - Hong Kong stocks were lower by midday on Thursday with telecommunications stocks taking a beating after a bleak outlook for the sector from Canadian telecoms equipment giant Nortel Networks Corp .

Property stocks also continued to draw selling on concern that price discounting will accelerate in the next few months as more new flats are readied for sale,

"People are definitely being more conservative generally, and sentiment over the property market still looks pretty bearish," said Y.K. Chan, investment strategist at CEF Securities.

The Hang Seng Index was down 1.32 percent, or 133.86 points, at 9,996.39 by the midday break, dipping slightly below the key psychological support at 10,000.

Expiry of the August futures contract added some support to the market, analysts said. The contract was down 1.06 percent at 10,005 by midday.

The Hang Seng properties sub-index was off 2.18 percent at 11,960.31.

"Nasdaq's fall is affecting tech stocks and PCCW's results are due next week so people are expecting they will not be pretty," said Herbert Lau, research director at Celestial Asia Securities.

The U.S. tech board, the Nasdaq Composite Index fell 2.48 percent on Wednesday on earnings downgrades by analysts and bearish earnings forecasts from Nortel Networks Corp and U.S. semiconductor maker Semtech Corp .

PCCW , Hong Kong's dominant fixed-line telecom operator, slipped to HK$1.40, its lowest level since the company took over Cable & Wireless Hongkong Telecom two years ago.

A union representative said on Wednesday that PCCW will propose a plan next week to give staff the option of taking jobs as subcontractors instead of PCCW staff.

Unions have threatened industrial action if PCCW cuts more jobs. The company and its affiliates have slashed more than 1,800 jobs in the past year.

PCCW, which is due to report first-half earnings next week, was down 3.42 percent at HK$1.41 by midday.

Meanwhile Chinese truck maker Qingling Motors was down 7.69 percent at HK$0.84, extending an 18 percent dive on Wednesday after it reported a 65 percent plunge to 59.42 million yuan (US$7.2 million) in its first-half net profit as fierce competition took its toll.

Investment bank Merrill Lynch has downgraded the stock to "reduce" from "neutral."

Elsewhere, property investment firm Hang Lung Properties was 4.27 percent lower at HK$7.85 on concerns about its earnings outlook, after the company posted a near 13 percent fall in net profit for the year ended June.

While the earnings were in line with expectations, the stock was battered as some analysts were planning to cut their profit forecasts for the 2002/03 fiscal year, market watchers said.

Market turnover totalled a modest HK$2.65 billion (US$340 million), slightly higher than midday turnover on Wednesday.



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