The HSI closed up 122 points on turnover of $17.8bn. Hutchison, Cheung Kong and China Telecom led the market higher, offsetting falls in HSBC and C&W HKT. The subscription period for tom.com expired, with huge investor demand for the IPO also adding to the positive sentiment for tech stocks. PCCW, which was the most actively traded stock, continued to fall, closing down a further 6.6%. The overall mood of the market remains cautious, as investors look for dirAection from the US, and for further news about C&W HKT.
PCCW (1186) BUY
Market talk has it that PCCW will invest in Legend (992) $33.00 Hold, and that Legend has reached an agreement with PCCW to install software for using PCCW's broadband services (NOW) on its PCs and to manufacture set-top boxes. Legend's share price shot up 13% yesterday.
If the JV materialises, we believe it will be positive to both companies. Legend already has over 25% market share of China's PC market, and this will provide an effective channel for promoting PCCW's broadband services.
Additionally, Pacific Convergence could provide contents for Legend's portal, fm365.com. Currently the portal provides six channels, which includes news, education, entertainment, life style, stock market and shopping information.
Elsewhere, the share price of China Data Broadcasting (8016) $14.10, an Internet set top box play, surged 38% yesterday. The company is engaged in the research and development of hardware and software for data broadcasting businesses in China and has recently formed a strategic alliance with Hei Long Jiang Securities to promote its financial TV set top boxes in Hei Long Jiang province.
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