Asia: Gold Shines, Telcos Fade

Among the day's movers on the mainland, property shares gained, while banks sold off a bit. Shanghai Lujianzui Finance & Zone Development (SLUJF Quote) gained 0.5%, to 2.37 yuan, and others followed. Bank of China(BACHF Quote) and Industrial and Commercial Bank of China(IDCBF Quote) both eased 0.1%, to 6.90 yuan, and 8.29 yuan, respectively, as investors took profits from last week's rally in the financial sector.

In Hong Kong, gold shone among a market that was broadly sluggish and experienced heavy profit taking among telecoms companies.

Sino Gold(SIOGF Quote) jumped 3.9%, to HK$56.85, while Lingbao Gold(LGBOF Quote) ended 2.6% higher, at HK$5.89. Zijin Mining(ZIJMF Quote) and Zhaojin Mining(ZHAOF Quote) resisted the index's selling pressure, finishing unchanged at HK12.86, and HK$40.30, respectively.

Among telecoms, investors liquidated positions in the afternoon session, when the Hang Seng lost its momentum. China Unicom(CHU Quote) slumped 3.4%, to HK$18.04, while China Netcom(CN Quote) lost 3.2%, to HK$24.10, and China Mobile(CHL Quote) dipped 2.8%, to HK$130.20. Only China Telecom(CHA Quote) gained, up 1.4%, to HK$6.73.

Most market participants in Hong Kong say that China Telecom has the most to gain from the current restructuring of the telecom industry. China Mobile announced it was calling off talks with Apple(AAPL Quote) as a result of the U.S. giant's demand for 30% margins, which it said was too high. Dealers noted however that this may be part of the negotiation process, and that a second round of talks may soon ensue.

Shares in Esprit Holdings tested what many predicted Friday would be a new HK$90 level for the Eurozone fashion retailer, and dropped 5.3% for the day, to HK$90.95.

Among properties, shares fell even as the Federal Reserve Fund Futures were pricing in a 75 basis point interest rate cut for the first time in Asian trading. Dealers noted that real estate investment trusts, or REITS, were cheap at current levels. Hang Lung Properties(HLPPY Quote) lost 4%, to HK$31.65, while Cheung Kong(CHEUY Quote) lost for the third day running, down 0.1%, to HK$136.70.

Citigroup noted in a research report issued to the bank's clients today that a 50 basis point rate cut appears likely in January, which would bring about more stability to global financial markets as a whole.

"Rate cuts to 31⁄2% along with some cooling in price pressures would help stabilize financial conditions sufficiently to promote a gradual return to trend with some recovery as well in credit and equity markets heading into 2009," wrote analyst Robert DiClemente.