Hong Kong stocks rose, led by developers, after Morgan Stanley said the city’s land sale falling short of estimates yesterday “should not be interpreted as a negative market signal.”
Sino Land Co. (83), a winning bidder in yesterday’s auction, rose 0.5 percent. Sun Hung Kai Properties Ltd., the city’s biggest developer by market value, advanced 1.6 percent. Bank of China Ltd., the nation’s third-largest bank by market value, slid 1.2 percent, leading declines among banks on concern China may act to restrict money markets next year.
Developers benefit from “the structural change in demand for residential property, with mainland investors buying into this market,” said Mark Konyn, chief executive officer at RCM Asia Pacific Ltd., which oversees $12 billion, in a Bloomberg Television interview.
The Hang Seng Index gained 0.1 percent to close at 21,499.44, after falling as much as 0.4 percent and rising as much as 0.6 percent.
The measure has soared 49 percent this year, the biggest annual gain since 1999, as a record 9.2 trillion yuan ($1.35 trillion) of new loans in the first 11 months of this year and a $586 billion stimulus package helped revive China’s economy. The gauge has added 27 percent since the end of 1999.
Shares on the Hang Seng Index trade at an average 16.9 times estimated profit, up from 10.6 times at the start of 2009, data compiled by Bloomberg show.
‘Taking Some Profit’
“We’re a little bit cautious, taking some profits,” Konyn said. “Markets have run a lot, both here in Hong Kong, and in China, and across the region.”
The Hang Seng China Enterprises Index (HSCEI), which tracks so- called H shares of Chinese companies listed in Hong Kong, slipped 0.2 percent to 12,644.93.
Sino Land rose 0.5 percent to HK$14.82. K Wah International Holdings Ltd. (173), a Hong Kong developer controlled by billionaire Lui Che-woo that also has interests in a Macau casino operator, added 0.4 percent to HK$2.85.
Sino Land and K Wah, which bought 15 percent of one lot, together paid HK$10.4 billion for two waterfront sites in Hong Kong’s New Territories, falling short of the HK$11.4 billion lowest estimate of three analysts surveyed by Bloomberg News.
Sino Land “created a de facto entry barrier for other auction participants” by owning three adjacent sites, Morgan Stanley analysts led by Derek Kwong said in a research report today. “We believe this entry barrier, and not lukewarm sentiment, is the key reason why other developers were deterred from bidding up the new plots.”
Sun Hung Kai advanced 1.6 percent to HK$114.60. Cheung Kong (Holdings) Ltd. (1), Hong Kong’s second-largest developer by market value, rose 1.8 percent to HK$98.60. The Hang Seng Property Index’s 1.2 percent gain was the biggest among the four industries tracked by the broader Hang Seng Index.
Bank of China fell 1.2 percent to HK$4.09, the biggest drop on the Hang Seng Index, and extending a 1.4 percent decline in the stock yesterday. China should draft “reasonable” measures for managing liquidity to ensure stable economic growth, Bank of China Chairman Xiao Gang wrote in a commentary in the official People’s Daily yesterday.
China Construction Bank Corp. (939), the nation’s second-biggest bank by market value, dropped 0.6 percent to HK$6.56.
Carpenter Tan Holdings Ltd. (837), a producer of wooden accessories, surged 52 percent to HK$3.93 on its debut. Schramm Holding AG, which supplies automotive and industry coatings, climbed 1.9 percent to HK$37.70 on its first day of trading.
China Railway Construction
China Outdoor Media Group Ltd. (254), which leases commercial properties, dropped 1.4 percent to 20.8 Hong Kong cents, after soaring as much as 26 percent. The company said yesterday it will pay HK$1.24 billion to buy GMG Media Group Ltd., which operates television channels for large-screen billboards at shopping malls in China.
China Railway Construction Corp. (1186), builder of more than half the nation’s rail links since 1949, rose 0.9 percent to HK$9.96. The company and Tongling Nonferrous Metals Group Holdings Co. offered C$679 million ($651 million) for Canada’s Corriente Resources Inc. to gain copper resources in South America. Corriente shareholders will receive C$8.60 per share in cash, China Railway said yesterday.
Hunan Nonferrous Metals Corp. (2626) tumbled 16 percent to HK$3.02 after trading resumed. China Minmetals Corp., the nation’s biggest metals trader, will acquire a 51 percent stake in the state-owned parent of Hunan Nonferrous, China’s biggest producer of zinc and tungsten. Beijing-based Minmetals agreed on Dec. 24 to pay 5.6 billion yuan through a unit for 49 percent of Hunan Nonferrous Metals Holding Group Co., Hunan Nonferrous Metals’ parent, Minmetals said yesterday.
BYD Co. (1211), the Chinese electric-car maker backed by Warren Buffett, rose 2.5 percent to HK$68.75. BYD aims to sell 800,000 vehicles next year, double this year’s target, China Business News reported, citing the company.
Beiren Printing Machinery Holdings Ltd. (187), a Chinese manufacturer of printing equipment, tumbled 21 percent to HK$2.58 after its controlling shareholder delayed a planned restructuring of the company. Trading resumed after being suspended since Dec. 8.
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