HONG KONG: Hong Kong stocks fell on Friday, tracking Wall Street and regional weakness, with China Mobile <0941.hk> leading the losses on speculation that an industry revamp may start next year and see it lose market share.

But recently listed shares bucked the broad market trend, with Vietnam Manufacturing & Export Processing Ltd soaring as much as 19 percent and China National Materials Company Ltd (Sinoma) jumping 10 percent. The benchmark Hang Seng Index fell 1.06 percent to 27,546.82 on mainboard turnover of HK$42.2 billion (US$5.4 billion). The China Enterprises Index of Hong Kong-listed mainland companies , or H shares, fell 1.59 percent to 16,087.34. "It's just an instant feedback of negative global sentiment due to the Pakistan unrest," said Peter Lai, director of DBS Vickers, refering to the assassination of Pakistan's opposition leader Benazir Bhutto, which some fear will spur instability.

"But as we can see, Dow Jones futures are now up. I believe the market may go back again," he said, adding that turnover would be low as most investors were still in holiday mood. Japanese stocks , which closed for the year on Friday, ended down 11 percent for 2007 in their first annual decline in five years, which also weighed on regional markets. Some telecom stocks gained in Hong Kong after Chinese state media quoted the country's top telecoms regulator as saying Beijing would push a long-awaited reshuffle of the telecoms industry in 2008, creating players that operate both wireless and fixed-line services to address unbalanced competition. China Telecom <0728.hk>, defying the market's slide, climbed 0.6 percent, on speculation that the fixed-line operator will get a mobile licence in the industry revamp, while telecoms equipment maker ZTE climbed 0.5 percent. But China Mobile slid 1.3 percent as investors feared it would lose market share.

Air China soared 5 percent as Hong Kong and mainland China agreed to relax restrictions on aviation services, letting carriers such as Air China expand flights and cargo services. Bank of East Asia jumped as much as 4.5 percent after Spain's largest savings bank La Caixa said it had bought about 4 percent of Hong Kong-based bank in a deal worth around 265 million euros, becoming the biggest public shareholder.

ICBC (Asia) gained 2.9 percent after Industrial and Commercial Bank of China (ICBC) said it had agreed to buy HK$1.92 billion worth of shares and warrants of ICBC (Asia) from the Spanish Fortis Bank. China's second-largest listed electricity producer Datang Power rose 1.9 percent after the company said it was planning a reorganisation and would discuss the issue with regulators within eight trading days.

BROKER CALL Merrill retains cautious view on China banks for next 3-6 months

HONG KONG (XFN-ASIA) - Merrill Lynch (NYSE:MER) (OOTC:MERIZ) reiterated its 'cautious view' on the China banking sector for the next 3-6 months after the country reportedly set loan growth quotas for the big four state-owned banks for 2008.

However, it said it continues to believe in the fundamental story of the sector.Merrill expects Industrial and Commercial Bank of China (OOTC:IDCBF) (ICBC) to outperform in the near term, while reckoning that Bank of China (BOC) has the most re-rating potential over a 12-month period.China's central bank has set a rough ceiling for new yuan loans next year of around 3.6 trln yuan, about the same level as for 2007, mainland media reported earlier.ICBC, China Construction Bank (OOTC:CICHF) (CCB) and Agricultural Bank of China were required to keep net new loans within their 2007 targets at 365 bln, 350 bln and 310 bln yuan, respectively, while quota for BOC was trimmed from 280 bln to 260 bln, reports said.If the figures are accurate, they would translate into loan growth of 11.1 pct, 13.2 pct and 17.3 pct for ICBC, CCB and BOC, respectively, in 2007 and 10.0 pct, 11.7 pct and 13.7 pct in 2008, Merrill said.

The quotas were for yuan loans only. As the sector's foreign currency loans were growing at over 30 pct in 2007, the banks' reported aggregate loan growth should be slightly higher, it noted.

The seemingly lower new loan quota for BOC was mainly due to the bank's accelerated loan growth in 2007 -- nearly 17.3 pct against 11.1 pct in the case of ICBC and 13.2 pct at CCB.Merrill has a target price of 9.45 hkd for CCB's Hong Kong-listed H-shares. It targets 6.10 hkd for BOC's H-shares and 8.00 hkd for ICBC shares.At 2.44 pm, CCB shares were down 0.19 hkd or 2.82 pct at 6.54, while BOC was down 0.06 hkd or 1.56 pct at 3.79 and ICBC was down 0.12 hkd or 1.94 pct at 5.57.

Buffett buys 60% stake in Pritzker firm

Warren Buffett's Berkshire Hathaway is paying $4.5 billion for a 60 percent stake in Marmon Holdings Inc., a privately-held conglomerate controlled by the Pritzker family in Chicago.

The acquisition was announced Tuesday by Buffett, the legendary investor who serves as chairman and chief executive of Berkshire Hathaway, and Tom Pritzker, chairman of Marmon. The deal is expected to close within the next three months.
Berkshire Hathaway (BRKA, Fortune 500) will take control of 60% of Marmon and acquire the rest of the company within six years, according to a joint statement.
Buffett noted "Marmon's impressive record of growth and profitability over the years."
Marmon comprises more than 125 manufacturing and service businesses in the energy, construction, transportation, engineering and other sectors in North America, the United Kingdom, Europe, China and elsewhere, according to the statement.
The companies said that Marmon's annual revenues total approximately $7 billion and that operating income more than tripled between 2002 and 2007.
The Pritzker family, whose businesses include the Hyatt hotel chain, has controlled Marmon since 1953.
Buffett has built Berkshire Hathaway into a massive holding company with interests ranging from underwear to private jets. Its 2006 revenues were $98 billion. Berkshire Hathaway's shares have outperformed the S&P 500 by more than two-fold since 1965.