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Hong Kong Stocks Swing Between Gains, Losses; Developers Fall

Nov. 8 (Bloomberg) -- Hong Kong stocks swung between gains and losses, closing little changed, as energy producers surged after Deutsche Bank AG turned positive on power companies, while developers fell on speculation mainland home prices will drop.

Huaneng Power International Inc. soared 11 percent. Little Sheep Group Ltd., which operates a hot-pot restaurant chain, surged 15 percent after Yum! Brands Inc.’s takeover of the company was cleared by China’s Ministry of Commerce. China Resources Land Ltd., a state-run developer, sank 3.6 percent.

The Hang Seng Index rose less than 0.1 percent to 19,678.47 at the close in Hong Kong, paring gains as much as 1.2 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong climbed 0.4 percent to 10,686.02 amid speculation inflation in China is slowing.

“The perception in equity markets is that something is going to work out, it’s going to be fine,” Viktor Shvets, a Hong Kong-based strategist at Samsung Securities Co., told Susan Li on Bloomberg Television’s “First Up.”

The MSCI Asia Pacific Index swung between gains and losses ahead of a parliamentary vote in Italy that will show whether Prime Minister Silvio Berlusconi has enough support to stay in power as his country wrestles with the euro-zone debt crisis.

Almost twice as many stocks fell as rose in the Hang Seng Composite Index. The gauge of Hong Kong equities has fallen 16 percent this year, sending its valuation to 9.2 times reported earnings, according to data compiled by Bloomberg.

Food, Power

China’s food prices may have fallen 0.4 percent in October from the month before, the first drop since June, the Shanghai Securities News reported today, citing Guotai Junan Securities Co. A report tomorrow may show consumer prices rose 5.5 percent last month from a year earlier, compared with 6.1 percent in September, according to the median estimate of economists surveyed by Bloomberg.

Huaneng Power surged 11 percent to HK$4, and Datang International Power Generation Co. gained 17 percent to HK$2.45 after Deutsche Bank raised its rating on the shares to “buy” from “hold.” China Resources Power Holdings Co. gained 7.8 percent to HK$14.90, the biggest gain in the Hang Seng Index.

Deutsche Bank turned overweight on Chinese independent power producers from a “negative/neutral” stance held since late 2009, analysts led by Michael Tong wrote in a report dated today. The brokerage cited five likely re-rating events, including a tariff increase, cheaper coal prices, monetary policy loosening and progress on reforms.

Iron-Ore Capacity

Angang Steel Co., the biggest Hong Kong-listed Chinese maker of the material, climbed 5.8 percent to HK$5.63 after China’s Ministry of Industry and Information Technology reiterated a proposal to consolidate major domestic steelmakers into three to five large players. Maanshan Iron & Steel Co. climbed a fifth day, rising 3.2 percent to HK$2.60.

China also plans to add more than 100 million tons of overseas iron-ore capacity by 2015, according to a steel industry plan posted on the ministry’s website yesterday.

Zijin Mining Group Co., China’s biggest gold producer by market value, jumped 5.9 percent to HK$3.79. The company said it would pay Jinchuan Group Ltd. more than $200 million for a 45 percent stake in a copper and gold mine in Tibet.

China Gold International Resources Corp., which explores for the metal in Asia, rose 4.4 percent to HK$26. Bullion for immediate-delivery fell as much as 0.3 percent to $1,790.38 an ounce today. It touched $1,798.65 yesterday, the most expensive since Sept. 21.

Little Sheep

Little Sheep advanced 15 percent to HK$6.37. Yum! Brands, the owner of the KFC and Pizza Hut fast-food chains, is seeking to delist Little Sheep by offering HK$6.5 a share in an all-cash deal that would give Yum 93 percent of the company.

Shengli Oil & Gas Pipe Holdings Ltd. surged 16 percent to 87 Hong Kong cents. The producer of pipelines said it expects to post a “significant” gain in second-half profit.

Futures on the Hang Seng Index that expire this month rose 1 percent to 19,797. The Hang Seng Volatility Index fell 2.5 percent to 35.35, indicating options traders expect a swing of 10 percent in the gauge in the next 30 days.

Mainland property developers dropped after Barclays Capital Research said home prices will fall as much as 30 percent next year, driven by the government’s housing curbs. China Resources Land Ltd., a state-controlled developer, sank 3.6 percent to HK$11.78, while China Overseas Land & Investment Ltd., a developer controlled by the nation’s construction ministry, declined 5 percent to HK$13.56.

State authorities have prepared several measures to prevent home prices from rebounding, the Shanghai Securities News reported today, citing unidentified sources. Possible curbs include a property tax, according to the report.

To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net.

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

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