Chinese blue chip shares suspended in Hong Kong

SHARE trading in Citic Pacific, China's first Hong Kong blue chip, was suspended yesterday amid speculation that it will buy a stake in Hongkong Telecom, the telecommunications monopoly controlled by Cable & Wireless.

It is expected that Citic Pacific will issue new shares to buy a stake in Hongkong Telecom from its Peking-based parent company, the China International Trust and Investment Corporation.

The parent owns 19 per cent of HKT but has been expected to divest all or part of the holding to expand into other areas.

Rumours swept the market that Citic Pacific was about to issue new shares to raise up to HKdollars 7.6bn ( pounds 637m). There was no comment from Citic Pacific or the three securities houses rumoured to be handling the placement.

The Hong Kong Economic Journal said the placement was called off when the news leaked and Citic Pacific's shares fell to a planned placement price of HKdollars 13.50. Some brokers said the size of the issue might be scaled back while others suggested Citic Pacific might have a target other than Hongkong Telecom.