Hong Kong Stocks Swing Between Losses, Gains; Developers Fall

Hong Kong stocks swung between losses and gains as some companies rose on higher profits forecasts while Chinese developers fell after the government said it’s seeking to limit residential prices in smaller cities.

China Overseas Land & Investment Ltd. (688), controlled by the nation’s construction ministry, sank 4.7 percent. Jiangxi Copper Co., China’s biggest producer of the metal by market value, slid 0.7 percent as metal prices fell after U.S. Federal Reserve Chairman Ben S. Bernanke said he has no immediate plans to further stimulate the economy. Changsha Zoomlion Heavy Industry Science and Technology Development Co., a construction machinery maker, rose 0.5 percent on higher profit expectation.

Imposing China’s property curbs “across the country will affect the revenue for a lot of developers, and hurt their share prices,” said Castor Pang, head of research at Core-Pacific Yamaichi International Ltd. in Hong Kong. “Companies’ positive profit surprises are helping to improve the market sentiment, but it won’t create a strong rebound.”

The Hang Seng Index fell 0.3 percent to 21,883.89 at the midday-trading break, after rising as much as 0.2 percent. Almost twice as many stocks declined as gained in the 46-member gauge. The gauge is headed for a 3.7 percent weekly drop, the steepest since the period ended March 25. The Hang Seng China Enterprises Index of Chinese companies’ H shares fell 0.4 percent to 12,282.10.

A measure of property developers had the biggest decline among the Hang Seng Index’s four industry groups. China Overseas Land sank 4.7 percent to HK$16.10. China Resources Land Ltd. (1109), a state-controlled developer, fell 2.8 percent to HK$14.70.

Home Purchase Limits

China will expand its efforts to curb the growth in residential prices to smaller cities after limiting home purchases in Beijing and Shanghai, according to a summary of a State Council meeting chaired by Premier Wen Jiabao.

The government said so-called second and third-tier cities which have seen excessive price gains should restrict the number of homes each family is allowed to buy, according to the State Council or cabinet yesterday.

Jiangxi Copper slid 0.7 percent to HK$27.30, and United Co. Rusal, a Russian aluminum producer, dropped 1.9 percent to HK$9.71 after the London Metal Exchange Index of prices for six industrial metals including copper and aluminum fell 1.8 percent yesterday.

The Federal Reserve’s Bernanke yesterday told Congress that the central bank isn’t currently ready to embark on a third round of government bond-buying to stimulate the economy.

Zoomlion

The Hang Seng Index (HSI) has dropped 4.8 percent this year through yesterday, on concern China’s tightening measures, and Europe and U.S. debt will hamper global economic growth. Shares in the gauge traded at 11.8 times forecast earnings at the last close, compared with about 14.4 times at the end of last year, according to data compiled by Bloomberg.

Among stocks that rose, Changsha Zoomlion increased 0.5 percent to HK$16 after saying first-half net income may have risen by as much as 110 percent from a year earlier.

Anhui Conch Cement Co. rose as much as 1.9 percent after the maker of the building material said it expects first-half profit will triple, while Stella International Holdings Ltd. (1836), a footwear maker, climbed 1.8 percent after saying unaudited second-quarter sales gained 23 percent.

International Mining Machinery Holdings Ltd. (1683), a maker of coal-mining equipment, surged 18 percent after resuming trading today since its suspension on July 12. Joy Global Inc. agreed to acquire a 41 percent stake of the Chinese company for HK$4.55 billion ($584 million).

Airlines Rise

Airlines increased after the Shanghai Daily said Chinese airlines’ first-half traffic increased 9.8 percent from a year earlier to 139 million passengers, citing the Civil Aviation Administration of China.

China Southern Airlines Co., Asia’s largest carrier by passenger numbers, jumped 6.1 percent to HK$4.90, while China Eastern Airlines Corp., the No. 2, advanced 1.9 percent to HK$3.68.

Futures on the Hang Seng Index slid 0.5 percent to 21,861. The HSI Volatility Index, the benchmark gauge for Hong Kong stock options, rose 2.2 percent to 21.31, indicating options traders expect a swing of 6.1 percent in the Hang Seng Index in the next 30 days.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.