Hong Kong Stocks Rebound From 1-Year Low; Cathay Pacific Climbs

By Hanny Wan

Aug. 25 (Bloomberg) -- Hong Kong stocks rose, lifting the benchmark index from a one-year low, after crude oil prices tumbled and China Construction Bank Corp. reported higher profit.

Cathay Pacific Airways Ltd., which posted this month a first-half loss after jet-fuel costs almost doubled, advanced 4.5 percent after oil prices dropped more than $6 on Aug. 22. Construction Bank, the nation's second-biggest bank, climbed 3.5 percent after saying first-half profit surged 71 percent.

``I like Chinese banks,'' said Winson Fong, a fund manager at SG Asset Management Hong Kong Ltd., which oversees $3 billion in Asia outside Japan. ``They are the driving force of the Chinese economy. If we're talking about fundamentals, I don't think we need to worry too much'' about the banks, he said. Fong said his fund holds Construction Bank's shares.

The Hang Seng Index added 614.02, or 3 percent, to 21,006.08 as of 2:54 p.m. local time. The gauge closed on Aug. 21 at its lowest since Aug. 17, 2007. It has dropped 24 percent this year as soaring inflation assailed global economies and the world's largest financial companies posted writedowns and credit losses of more than $500 billion.

The Hang Seng China Enterprises Index, which tracks so- called H shares of Chinese companies, climbed 3.6 percent to 11,311.35, set for its highest close since Aug. 12.

The city's markets were closed on Aug. 22 due to a storm.

Cathay Pacific advanced 4.5 percent to HK$14.78, making it the fourth-biggest percentage gainer on the Hang Seng Index. Fuel accounts for about half of Cathay Pacific's operating costs. Air China Ltd., the nation's largest international carrier, added 0.8 percent to HK$3.70.

Oil Tumbles

China Petroleum & Chemical Corp. climbed 3.4 percent to HK$7.85. Asia's biggest oil refiner said yesterday first-half net income fell 77 percent to 8.26 billion yuan ($1.21 billion). That beat the median estimate of 7 billion yuan in a Bloomberg analyst survey.

Crude oil futures tumbled 5.4 percent to $114.59 a barrel in New York on Aug. 22, the biggest drop since Dec. 27, 2004. The contract was at $115 in after-hours trading. The price of jet fuel, a product of crude oil, has dropped 11 percent this month through Aug. 22.

Construction Bank climbed 3.5 percent to HK$6.18. The bank said on Aug. 22 its first-half profit surged 71 percent to 58.7 billion yuan as it boosted lending revenue and increased fee- based services. The median estimate of five analysts surveyed by Bloomberg News was for a profit of 59 billion yuan.

Industrial & Commercial Bank of China Ltd., the world's most profitable bank, rose 3.9 percent to HK$5.32, headed for its highest close since Aug. 12. CLSA Asia-Pacific Markets initiated coverage on the stock with a ``buy'' rating and share-price estimate of HK$6.25, according to an Aug. 22 research note.

Shares on the Hang Seng Finance Index accounted for 46 percent of the broader Hang Seng Index's advance.

All stocks on the 43-member Hang Seng Index climbed. August futures added 3.2 percent to 21,025.

The following stocks rose or fell. Stock symbols are in brackets after company names.

Aluminum Corp. of China Ltd. (2600 HK), the nation's biggest producer, known as Chalco, advanced 26 cents, or 4 percent, to HK$6.84. Its parent Aluminum Corp. of China, or Chinalco, got Australian approval to raise to 11 percent its stake in Rio Tinto Group, the world's third-largest mining company. Chinalco, in partnership with Alcoa Inc., bought 9 percent of Rio in February.

China Netcom Group Corp. (906 HK) rose 75 cents, or 3.7 percent, to HK$20.90. The fixed-line phone company being acquired by China Unicom Ltd. (762 HK) said first-half profit rose 12 percent to 5.88 billion yuan as stronger sales of high-speed Internet services compensated for lower phone revenue. The profit, which excluded gains from connection fees, beat the 5.3 billion yuan median estimate of five analysts in a Bloomberg survey.

Cosco Pacific Ltd. (1199 HK) climbed 24 cents, or 2.4 percent, to HK$10.42. Asia's No. 3 container-terminal operator boosted first-half profit by 11 percent as China's surging exports of toys, furniture and clothes fueled sea-cargo traffic. Net income climbed to $153.2 million, the company said during the lunchtime trading break.

Ping An Insurance (Group) Co. (2318 HK), China's second- biggest insurer, rose HK$2.45, or 4.8 percent, to HK$53.85. The company is in talks to acquire Guangzhou Commercial Bank, the Economic Observer reported, citing people it didn't identify.

Tingyi (Cayman Islands) Holding Corp. (322 HK) climbed 22 cents, or 2.6 percent, to HK$8.86. The company's first-half profit rose 33 percent after China's biggest maker of packaged food boosted sales of instant noodles and cold drinks. Net income increased to $127.6 million, the company said during the trading break.

To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net