Hong Kong Stocks Drop; Cnooc, Chalco Fall, Huiyuan Juice Jumps

By Hanny Wan

Sept. 3 (Bloomberg) -- Hong Kong stocks dropped, pushing the benchmark index to the lowest in two weeks, led by Cnooc Ltd. and Aluminum Corp. of China Ltd. after commodities declined the most since March.

Cnooc, China's third-largest oil company, retreated 5.1 percent. Aluminum Corp. tumbled 6.4 percent. Industrial & Commercial Bank of China Ltd. slipped 2.6 percent after state media said the nation's producer price inflation may have accelerated. China Huiyuan Juice Group Ltd. surged as much as 172 percent after Coca-Cola Co. offered to buy the company for HK$17.9 billion ($2.3 billion).

``Investors are unloading commodities, plus the entire market has gotten more cautious, so the upside for commodities is quite limited,'' said Renault Kam, a senior portfolio manager at Atlantis Investment Management in Hong Kong, which oversees $5 billion.

The Hang Seng Index lost 331.59, or 1.6 percent, to 20,710.87 as of 2:47 p.m. local time, set for its worst close since Aug. 21. The Hang Seng China Enterprises Index, which tracks so-called H shares of Chinese mainland companies, declined 2.3 percent to 11,193.89.

Cnooc, the second-biggest percentage loser on the Hang Seng Index, plunged 5.1 percent to HK$10.80. PetroChina Co., the nation's largest oil producer, slipped 2.5 percent to HK$9.70.

Chalco, as Aluminum Corp. is known, retreated 6.4 percent to HK$6.46, making the nation's largest producer of the lightweight metal the biggest loser by percentage on the Hang Seng Index. Zijin Mining Group Co., owner of China's largest gold mine, sank 6 percent to HK$4.56. Jiangxi Copper Co., the second-biggest smelter in China, dropped 4.4 percent to HK$11.42.

Commodities

The Reuters/Jefferies CRB Index of commodities declined the most since March 19, led by energy prices, as Hurricane Gustav spared U.S. Gulf petroleum rigs the destruction caused by Katrina and Rita in 2005. Commodities also slumped after the U.S. dollar jumped to the highest since October against six major currencies, eroding the appeal of raw materials priced in the U.S. currency.

Gold futures for December delivery fell 3 percent yesterday, the most since Aug. 11, in New York, while copper declined 3.4 percent. Crude oil dropped 5 percent to $109.71 a barrel after touching $105.46 yesterday, the lowest since April 4.

Industrial & Commercial Bank of China, or ICBC, the world's most profitable bank, dropped 2.6 percent to HK$5.21 on concern that higher inflation may prevent the central bank from loosening lending rules.

China's producer-price inflation may have accelerated to 10.3 percent in August, the official China Securities Journal reported, citing Fan Jianping, the head of the economic forecast department of the State Information Center. The statistic will be released on Sept. 10.

Huiyuan Juice

Huiyuan Juice, China's biggest maker of pure fruit juice, soared 164 percent to HK$10.94. The stock resumed trading today after being suspended Sept. 1. Atlantic Industries, a unit of Coca-Cola, the world's biggest soft-drink maker, offered to buy Huiyuan Juice at HK$12.20 a share and will buy all the outstanding convertible bonds of the Chinese company, Huiyuan Juice said. That's triple Huiyuan Juice's closing price of HK$4.14 on August 29.

Other Chinese beverage makers also rose. Yantai North Andre Juice Co., a Chinese producer of apple juice concentrate, surged 13 percent to 61 Hong Kong cents, after jumping as much as 31 percent. China Mengniu Dairy Co., the nation's biggest producer of liquid milk, added 1.3 percent to HK$22.80.

Shangri-La Asia Ltd. declined 2.6 percent to HK$13.64. Asia's biggest luxury-hotel operator said yesterday first-half profit fell 15 percent to $135.7 million as costs increased and occupancy dropped because of rising airfares, natural disasters and tightened visa rules in China.

Almost five stocks on the 43-member Hang Seng Index declined for each that climbed. September futures slipped 2.4 percent to 20,641.

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