Hong Kong shares end morning sharply higher as govt announces tax cuts UPDATE
Share prices finished the morning sharply higher after the government announced cuts in corporate and personal income taxes and a one-off waiver of property taxes, meeting market expectations.
Financial Secretary John Tsang announced in his budget speech today that salaries tax standard rate will be cut to 15 pct from 16 pct, while corporate tax rate will be lowered to 16.5 pct from 17.5 pct.
He also announced a rebate of 75 pct in salaries tax for the current fiscal year ending March, subject to a ceiling of 25,000 hkd, and 75 pct rebate in property tax for 2007-08.
Tsang also announced a waiver of property rates for the next fiscal, subject to a ceiling of 25,000 hkd per quarter.
Property stocks and retailers got a boost as the tax cuts are expected to boost consumer spending.
Financials also lifted the key index as Standard Chartered surged over 8 pct after announcing better-than-expected 2007 results, helping boost others in the sector.
Oil stocks were up after crude prices moved back above the 100 usd a barrel level.
Sentiment overall was bolstered by Wall Street's gains overnight after IBM announced a 15 bln usd share buyback.
The Hang Seng index ended the morning up 882.14 points or 3.72 pct at 24, 597.14, off a low of 24,111.60 and high of 24,610.41.
Turnover was 57.48 bln hkd.
The property sector index was up 1,266.22 points or 4.08 pct at 32,292. 49, while finance sector index was up 1,584.54 points or 4.7 pct at 34,684. 68.
Castor Pang, a strategist at Sun Hung Kai Financial group, said the morning gains surpassed his expectations.
Wall Street's rise and a rebound in mainland bourses helped boost buying interest, while budget proposals also helped boost investor confidence, he said.
Pang noted that financial and property stocks were mainly in focus, pushing the key index higher.
The property sector is expected to benefit from tax breaks and the government's assurance of stable land supply, he said.
""Stable land supply will help maintain a healthy property market,"" he said.
Meanwhile, Standard Chartered's ""better-than-expected results helped strengthen hopes for strong results from other banks,"" Pang added.
China financials also got a lift as worries over a fund-raising spree in the sector eased after Chinese regulators warned against indiscriminate fund-raising activities, he said.
Among banks, HSBC was up 4.3 hkd or 3.59 pct at 124, Hang Seng Bank was up 4.2 hkd or 2.98 pct at 145.3, Bank of East Asia rose 1.4 hkd or 3.38 pct and BOC HK was up 0.88 hkd or 4.65 pct at 18.92.
Standard Chartered surged 20.2 hkd or 8.39 pct to 261 after announcing yesterday a 27 pct rise in 2007 pretax profit to 4.035 bln usd, beating analysts' consensus forecast of 3.93 bln usd.
The result was boosted by strong wholesale and consumer banking divisions, which offset a 300 mln usd charge for its Whistlejacket investment and other asset securitisation write-downs.
""The positive sentiment on Standard Chartered spilled over to HSBC and other banking counters,"" said Patrick Yiu, associate director at CASH Asset Management.
Among other blue chips, China Mobile was up 3.4 hkd or 2.92 pct at 119.7, China Life rose 1.9 hkd or 6.4 pct at 31.6 and Hutchison Whampoa was up 1.1 hkd or 1.48 pct at 75.45.
China financials were sharply higher as worries over possible fund-raisings eased.
Ping An Insurance surged 6.25 hkd or 11.16 pct to 62.25 after a report that is likely to delay a fund-raising exercise.
Among banks, ICBC was up 0.22 hkd or 4.21 pct at 5.45, Bank of China was up 0.14 hkd or 4.27 pct at 3.42, China Construction Bank rose 0.34 hkd or 6. 05 pct and Bank of Communications rose 0.48 hkd or 5.26 pct at 9.6.
Local property developers were sharply higher after the government announced property tax concessions and rebates.
Cheung Kong gained 5.1 hkd or 4.46 pct at 119.50, Henderson Land was up 3. 35 hkd or 5.59 pct at 63.3, Sun Hung Kai up 5.20 hkd or 3.83 pct at 140.90 and Wharf Holdings up 1.35 hkd or 3.36 pct at 41.50.
Swire Pacific rose 1.10 hkd or 1.2 pct at 92.70, reversing early losses following news that an institutional shareholder is selling 11.7 mln shares at 87.5 hkd each.
The property sector index was up 1,266.22 points or 4.08 pct at 32,292.49.
Oil counters were higher after crude futures moved back above the 100 usd a barrel.
PetroChina rose 0.52 hkd or 4.49 pct to 12.1, CNOOC was up 0.42 hkd or 3. 21 pct at 13.5 and Sinopec up 0.37 hkd or 4.44 pct at 8.71.
Air China rose 0.23 hkd or 3.07 pct to 7.72 despite news that China Eastern Airlines has rejected Air China parent's bid for an operational and capital tie-up.
China Eastern was up 0.16 hkd or 3.17 pct at 5.2.
The Hang Seng China Enterprises index ended the morning up 664.2 points or 4.98 pct at 13,991.04.
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