Hong Kong's Stocks Climb Most in a Week; Esprit, Sinopec Rise

By Hanny Wan

Aug. 7 (Bloomberg) -- Hong Kong stocks rose the most in a week after a retreat in crude oil prices eased concern higher energy costs will hurt consumption and earnings.

Esprit Holdings Ltd., a global clothing retailer, jumped the most in two weeks. China Petroleum & Chemical Corp., the nation's biggest refiner, advanced after oil prices fell yesterday to a three-month low. Cathay Pacific Airways Ltd. retreated the most in a month after reporting its first loss in five years. The stock market was closed because of a typhoon yesterday when the MSCI Asia Pacific Index rallied 1.5 percent.

Given a decline in oil prices, ``refiners are probably the more direct beneficiaries,'' said Gary Chan, a portfolio manager at Mirae Asset Global Investments (Hong Kong) Ltd., which oversees more than $3 billion. ``The airline sector is getting more and more competitive across the world. I think we can see a better entry point.''

The Hang Seng Index added 154.45, or 0.7 percent, to close at 22,104.20, its steepest advance since July 30. The benchmark has fallen 21 percent this year as a 24 percent increase in oil drove concerns that energy costs will rise.

The Hang Seng China Enterprises Index, which tracks so- called H shares of Chinese companies, lost 3.79 points, or less than 0.1 percent, to 11,943.85.

Li & Fung Gains

Esprit climbed 3.8 percent to HK$83, its largest jump since July 23 and making it the Hang Seng Index's second-biggest percentage gainer today. Li & Fung Ltd., which sells goods to Wal-Mart Stores Inc., added 3.1 percent to HK$25, its biggest advance since July 30.

Sinopec, as China Petroleum is known, rose 1.1 percent to HK$8.16, its largest advance since Aug. 1. The company said on July 17 that its first-half profit may have fallen more than 50 percent amid rising crude oil costs. The Chinese government's controls on refined oil prices distorted the correlation with crude prices, Sinopec said.

Crude oil futures dropped 0.5 percent to $118.58 a barrel in New York yesterday, the lowest close since May 2. The contract was recently at $119.31 in after-hours trading.

Cathay Pacific, Hong Kong's biggest carrier, lost 3.9 percent to HK$14.16, its worst drop since July 2. The company posted a first-half loss of HK$663 million ($85 million) after fuel costs almost doubled and it set aside funds to cover a U.S. price-fixing fine.

Goldman, Sachs & Co. cut its price estimate for the stock by 19 percent to HK$11, according to a research note today. UBS AG trimmed its price forecast for the stock to HK$14.25 from HK$14.50.

Almost two stocks on the 43-member Hang Seng Index advanced for each that dropped. August futures climbed 0.4 percent to 22,046.

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

China Shipping Container Lines Co. (2866 HK) retreated 13 cents, or 5.8 percent, to HK$2.13, its lowest close since April 10, 2007. The country's second-largest carrier of sea-cargo boxes will buy its parent's terminal unit for 2.6 billion yuan ($380 million). The unit owns stakes in 29 berths in cities including Shanghai, Guangzhou and Dalian, the container line said yesterday.

Hunan Nonferrous Metals Corp. (2626 HK) tumbled 20 cents, or 11 percent, to HK$1.56, the lowest close since its March 31, 2006, debut. China's biggest zinc and tungsten producer said first-half profit fell ``significantly'' because of lower prices. The company didn't give a profit figure in its statement yesterday.

Standard Chartered Plc (2888 HK) advanced HK$9.80, or 4.4 percent, to HK$234, its largest jump since July 17. The U.K. bank that earns most of its money in Asia said on Aug. 5 that first- half profit rose 31 percent to $1.79 billion, helped by corporate lending in India and Hong Kong.

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