Hong Kong Stocks Rise for First Time in Five Days as Oil Falls

By Hanny Wan and Bob Chen

July 30 (Bloomberg) -- Hong Kong stocks rose, snapping a four-day decline, as refiners and airlines climbed after crude oil traded near a 12-week low.

China Petroleum & Chemical Corp., the nation's biggest refiner, climbed to a six-week high and Cathay Pacific Airways Ltd. gained. Industrial & Commercial Bank of China Ltd., the world's largest by market value, and Sino Land Co. led gains by lenders and developers on speculation cheaper oil will slow the pace of inflation and ease pressure on banks to increase borrowing costs.

``Equity markets around the world are recovering from the oil shock,'' said Francis Lun, general manager at Fulbright Securities Ltd. in Hong Kong. For oil, ``people believe it's a sustained decline.''

The Hang Seng Index added 458.40, or 2.1 percent, to 22,716.40 at the 12:30 p.m. break, halting a four-day, 3.8 percent decline. All but three stocks on the 43-member gauge advanced. July futures climbed 1.8 percent to 22,690.

The measure has lost 18 percent this year as soaring raw- material prices and $473 billion of writedowns and credit-related losses hurt the outlook for economic and profit growth. Hong Kong's inflation accelerated in June to the fastest pace in four months as food and energy costs climbed.

The Hang Seng China Enterprises Index, which tracks so- called H shares of Chinese companies, rose 2.9 percent to 12,501.14.

Sinopec, as China Petroleum is known, jumped 5.3 percent to HK$8.32, set for its highest close since June 18. The stock was the biggest percentage gainer on the Hang Seng Index today. Cathay Pacific Airways Ltd., Hong Kong's biggest airline, rose 2.4 percent to HK$15.34. China Southern Airlines Co., the nation's largest carrier, surged 6 percent to HK$3.56.

Cheaper Fuel

Crude oil futures dropped 2 percent to $122.19 a barrel in New York yesterday, the lowest close since May 6. The contract was recently at $122.15 in after-hours trading.

ICBC rose 3.5 percent to HK$5.86, the most since July 9. Sino Land, a Hong Kong-based developer, advanced 3.7 percent to HK$15.82, its biggest gain since July 23.

Local lenders including BOC Hong Kong (Holdings) Ltd. and Hang Seng Bank Ltd. last month raised their mortgage rates for some customers to deflect the squeeze on lending margins. Accelerating inflation and slumping share prices may cause total home sales in the city to drop to a 10-month low, according to Centaline Property Agency Ltd.

Bank of China Ltd., the nation's third-largest bank, added 2 percent to HK$3.55 after saying it paid 9 million Swiss francs ($8.7 million) for a minority stake in Geneva-based Heritage Fund Management SA.

Higher Prices

Maanshan Iron & Steel Co. led steelmakers higher after U.S. Steel Corp., the nation's biggest producer of the alloy by market value, said second-quarter profit more than doubled on higher prices.

Maanshan Iron, the second-biggest Chinese steelmaker listed in Hong Kong by market value, rose 4.4 percent to HK$4.79, its largest jump since July 10. Angang Steel Co., the largest, added 2.1 percent to HK$15.80.

Gome Electrical Appliances Holdings Ltd., China's No. 2 electronics retailer by market value, climbed 3.3 percent to HK$3.18. The company bought a stake in retailer Sanlian Commerce Co. for 135 million yuan ($20 million), the China Business News newspaper said, without saying where it got the information.

Beijing Capital International Airport Co., operator of Asia's second-busiest airfield, tumbled 6.1 percent to HK$6.14, the most in two weeks, after saying first-half profit fell because of government restrictions and cancellation of flights due to rising fuel costs.

To contact the reporters on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net; Bob Chen in Hong Kong at bchen45@bloomberg.net