Most Hong Kong stocks fell as Chinese developers dropped on concern tight monetary policy and increased supply will lead to lower property prices and oil producers slid after China cut fuel prices.
Agile Property Holdings Ltd. (3383), which develops land in the southern province of Guangdong, tumbled 8.8 percent. China Petroleum & Chemical Corp. (600028), a refiner known as Sinopec, fell 4.4 percent after China cut fuel prices for the first time this year and its parent agreed to buy a Canadian oil explorer. Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal by market value, dropped 3.5 percent after UBS AG resumed its rating on the stock at “sell” from its previous “buy” rating.
Almost twice as many stocks dropped as gained in the Hang Seng Composite Index. The Hang Seng Index was little changed at 17,711.06, erasing losses of as much as 1.5 percent in late trading as European stocks rose. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong retreated 0.2 percent to 8,869.55 after China’s markets resumed trading from a week-long holiday.
“Property prices in the short term are less likely to go up, and buyers are less keen on purchases right now,” said Castor Pang, head of research at Core-Pacific Yamaichi International Ltd. in Hong Kong. “The government is still trying to keep the property price in the correction phase, and won’t let it hike. Hong Kong’s market may face some correction after rebounding last week.”
The Hang Seng Index rose 0.7 percent last week, its first weekly gain in five, as Europe-related shares advanced amid optimism officials will protect banks from the region’s debt crisis, and as luxury retailers soared on speculation sales will increase from mainland visitors. Companies on the index traded at 9.5 times forecast earnings at the last close, compared with 11.6 times for the Standard & Poor’s 500 Index.
Agile Property tumbled 8.8 percent to HK$5.47. China Overseas Land & Investment Ltd. (688), a developer controlled by the nation’s construction ministry, sank 3.5 percent to HK$12.24. China Resources Land Ltd. (1109), another state-controlled developer, retreated 3.4 percent to HK$8.58.
Chinese home prices will gradually ease due to rising inventories and a slump in property market transactions, the official Xinhua News Agency reported. The market declined during the week-long National Day holiday, typically a strong period for housing sales, it said.
China’s home transactions fell during the holiday week after residential prices posted their first monthly decline in a year, according to Soufun Holdings Ltd, the country’s biggest real estate website owner.
Fuel Prices Cut
Transactions in 20 major cities slipped by an average 32 percent last week from a year earlier, Soufun said in a report on Oct. 8.
PetroChina Co., the country’s biggest oil producer and Asia’s largest company by market value, declined 1.4 percent to HK$9.18. Ex-factory gasoline and diesel prices were both reduced by 300 yuan a metric ton, effective yesterday, the National Development and Reform Commission, the nation’s top economic planner, said. That represents a 3.5 percent drop for gasoline and 3.9 percent for diesel, according to prices provided in an Oct. 8 statement by the NDRC.
Sinopec declined 4.4 percent to HK$7.16. Its parent China Petrochemical Corp. agreed to buy Daylight Energy Ltd. for about C$2.2 billion ($2.11 billion) in cash to add oil and gas assets in Canada, the Calgary, Alberta-based company said yesterday in a statement.
Aluminum Corp., known as Chalco, had the third-steepest decline in the Hang Seng Index (HSI) after Sinopec, sinking 3.5 percent to HK$3.56. UBS said the largest risk to the company is the “aluminum price, which we expect to remain under pressure from weaker demand in the short term and oversupply in the medium term.”
Airlines declined after China’s Ministry of Transport said the number of passengers using the nation’s airlines grew at a slower pace than capacity in the National Day holiday week.
China Southern Airlines Co., Asia’s largest carrier by passenger numbers, retreated 1.3 percent to HK$3.95 while China Eastern Airlines Corp., the No. 2, sank 1.2 percent to HK$2.40.
Air-traffic capacity rose 8.2 percent to 42,263 flights during the holiday period from Oct. 1-7, the Ministry of Transport said in a statement on its website on Oct. 8. Passenger traffic increased 5.2 percent to 5.98 million during the week, it said.
Among stocks that rose, Li & Fung Ltd. (494), a supplier of clothes and toys to Wal-Mart Stores Inc., gained 1.5 percent to HK$13.20. Chief Executive Officer Bruce Rockowitz bought 1 million company shares at an average of HK$11.637 on Oct. 4, according to a Hong Kong stock exchange disclosure.
Hong Kong Developers
While Chinese developers declined, Hong Kong peers gained after real-estate broker Centaline Property Agency Ltd. said the city’s home prices rose. New World Development Co., which makes more than half its revenue in the city, increased 3 percent to HK$7.98, the biggest increase in the Hang Seng Index. Sun Hung Kai Properties Ltd. (16), the world’s biggest developer by market value, advanced 1.7 percent to HK$95.55.
Hong Kong home prices rose 0.59 percent in the seven days ended Oct. 2 from a week earlier, according to Centaline Property Agency. The Centa-City Leading Index, an indicator of housing prices in the city, climbed to 99.8, it said.
Chow Sang Sang Holdings International Ltd. (116), a gold and jewelry retailer, gained 2.1 percent to HK$18.82. National Day holiday sales surged more than 50 percent from last year due to a drop in gold prices, according to Dennis Lau, director of sales operations.
Futures on the Hang Seng Index gained 0.5 percent to 17,734. The HSI Volatility Index slid 4.2 percent to 36.48, indicating options traders expect a swing of 10 percent in the Hang Seng Index in the next 30 days.
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