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By Susan Fenton
HONG KONG, Feb 26 (Reuters) - Hong Kong stocks fell for a fifth straight day on Wednesday as minor gains in property plays and defensive stocks were offset by further weakness in the telecoms sector and a dip in banking giant HSBC Holdings , but war fears dampened overall trade.
However, global fashion retailer Esprit Holdings continued to outperform, climbing 1.3 percent to HK$15.55.
As war jitters discourage speculative trade, Esprit is seen as a relatively safe bet because the company offers the best earnings growth potential among blue chips, having recently posted a 44 percent surge in its first-half net profit.
The Hang Seng Index dipped 0.35 percent, or 32.20 points, to 9,116.28, after briefly rising to 9,163 on opening, but held key technical support at 9,100.
"We're not looking too good, the market is still drifting downward despite a technical rebound in selective stocks," said Herbert Lau, research director at Celestial Asia Securities. "Participants are waiting for expiry of the (February) futures tomorrow and bank results on Monday."
Lau sees the index holding above 9,000 this week.
Investors were unnerved by U.S. President George W. Bush, who said a new U.N. resolution was not essential and only Iraqi disarmament could avert war. Turnover fell to HK$4.2 billion (US$538.5 million) from Tuesday's already thin HK$5.1 billion.
HSBC put pressure on the HSI. It has a 30 percent weighting in the index and dipped 0.6 percent to HK$83.25.
The bank faces mixed sentiment as investors are bullish on its 2002 results, due on Monday, but fear the stock may be sold by U.S. investors once its takeover of U.S. consumer finance company Household International Inc is completed this quarter.
Household will be removed from the S&P 500 index after the takeover and HSBC is not a constituent of the index.
"I think there will be selling pressure on HSBC," said Stella Lau, a fund manager at East Asia Asset Management. "U.S. investors don't know HSBC well and won't want to buy it. However, quite a lot of (local) investors are looking to accumulate HSBC at around HK$80."
Market players put a bit of money into property stocks and defensive utility plays but continued to shun telecoms.
Hong Kong's dominant fixed-line telecom operator PCCW Ltd , whose longer-term prospects are clouded by an uncertain business strategy, fell 0.97 percent to HK$5.10.
China's two mobile phone operators remained weak on the threat of new competition.
China's biggest mobile phone operator China Mobile hit HK$17.15, its lowest level in nearly four years, before ending at HK$17.30, down 0.57 percent. Smaller rival China Unicom shed 1.03 percent to HK$4.825.
Chinese media recently reported that fixed-line mainland telecom operator China Netcom had won approval to expand its popular limited-access mobile phone service to Beijing next month.
Elsewhere, China's biggest oil producer CNOOC succumbed to profit taking after jumping 3.4 percent on Tuesday on the rising oil price. It retreated 1.87 percent to HK$10.50.
Away from blue chips, food-to-telecoms conglomerate First Pacific Co Ltd leapt 5.88 percent to HK$0.90, off a five-month high of HK$0.920, ahead of what were expected to be strong final results from Philippine Long Distance Telephone Co (PLDT) , in which FirstPac is the controlling shareholder.
PLDT, the Philippines' dominant telecom company, said on Wednesday that it would defer its results announcement until next month in order to produce audited results, not an unaudited version as planned, and that the results would be at the high end of expectations.
Chinese van and car maker Brilliance China Automotive Holdings Ltd fell 1.6 percent to HK$1.84 after a source familiar with the company told Reuters the automaker would slash prices of its Toyota-designed luxury vans by up to 45 percent when it starts using locally produced parts later this year.
(US$=HK$7.8)