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Hong Kong Stocks Rise as Property Developers Gain

Dec. 20 (Bloomberg) -- Hong Kong stocks rose, erasing earlier losses and extending the benchmark gauge’s 16-month high, as property developers advanced. Metals producers dropped after prices of the industrial-use commodities declined yesterday.

Guangzhou R&F Properties Ltd., a builder in the southern Chinese city, climbed 4.2 percent, leading developers higher. Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, fell 2.2 percent. Techtronic Industries Co., a maker of power tools that counts North America as its biggest market, retreated 3 percent. Esprit Holdings Ltd., a clothier that said it may post a first-half loss, extended its drop today after brokerages cut ratings or reduced target prices on the shares.

The Hang Seng Index rose 0.2 percent to 22,659.78 at the close. About equal numbers of stocks fell and gained on the 50-company measure in volume just higher than the 30-day average, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index of mainland companies fell 0.3 percent to 11,352.45.

“The overall trend is up,” said Alex Wong, a Hong Kong-based director at Ample Capital Ltd. “People are still taking profits towards the year-end and also ahead of the U.S. budget talk solution. The pattern of the correction probably would be steep and fast but probably won’t last too long.”

Hong Kong’s benchmark index has advanced 23 percent this year as central banks from the U.S., Europe and Japan announced stimulus to boost growth, and as U.S. and China showed signs of recovery in the world’s two largest economies. Shares on the measure traded at 11.9 times average estimated earnings yesterday, compared with 13.8 for the Standard & Poor’s 500 Index and 12.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Developers Surge

A measure of property companies had the biggest advance among the Hang Seng Index’s four industry groups. Guangzhou R&F jumped 4.2 percent to HK$12.98, while China Overseas Land & Investment Ltd., the biggest mainland developer by value listed in Hong Kong, climbed 2.2 percent to HK$23.60.

Beijing yesterday halted the sale of a residential site that could have set a record price for the capital city, said broker Bacic & 5i5j Group. The plot in an area close to embassies in the Chaoyang District would “no doubt become a land king,” the city’s second-biggest real estate agent said in an e-mailed statement, using a term referring to sites that fetch record prices.

‘Plan B Burden’

Standard & Poor’s 500 Index futures fell 0.3 percent today. The gauge slid 0.8 percent yesterday as White House Communications Director Dan Pfeiffer said House Speaker John Boehner’s “Plan B” would put “too big a burden on the middle class” and President Barack Obama would veto it. Boehner replied that Obama will be responsible for “the largest tax increase in American history” if Democrats don’t accept the measure the House plans to pass today.

The House may vote today on Boehner’s plan, which would raise tax rates on income of above $1 million, rather than the $400,000 threshold the president proposed in his latest offer.

Techtronic slid 3 percent to HK$14.92, while Li & Fung Ltd., a supplier of toys and clothes to Wal-Mart Stores Inc., sank 1 percent to HK$13.62.

Aluminum Corp. of China declined 2.2 percent to HK$3.49, while Jiangxi Copper Co., China’s biggest producer of the metal, dropped 1 percent to HK$20.65 after the London Metal Exchange Index of six industrial metals slid 0.9 percent yesterday.

Esprit retreated 1.4 percent to HK$11. The shares tumbled 4.5 percent yesterday after the company said it may post a loss in the first half ending Dec. 31 due to worse-than-expected operating results. JPMorgan Chase & Co. cut its rating on the stock to underweight from neutral, while Citic Securities Co. reduced it to overweight from buy.

Futures on the Hang Seng Index rose 0.1 percent to 22,632. The HSI Volatility Index climbed 0.1 percent to 15.68, indicating traders expect a swing of 4.5 percent for the equity benchmark in the next 30 days.

To contact the reporter on this story: 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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