Hong Kong Stocks Fall, Led by Developers on Demand Concern

By Chua Kong Ho

Sept. 10 (Bloomberg) -- Hong Kong stocks fell, as property developers slumped on concern weakening demand in China is forcing price cuts, while mining companies tracked declines in metals prices.

Shimao Property Holdings Ltd. dropped 5.7 percent after the Oriental Daily said the company was reducing prices by 25 percent for a project in Nanjing, an eastern Chinese city. China Overseas Land & Investment Ltd., a real-estate developer, plunged 11 percent on lower sales. Zijin Mining Group Co., which owns the nation's largest gold mine, slumped 9.3 percent as the precious metal fell to a 10-month low.

``There's still more uncertainty to come regarding the state of'' China's economy, said Victoria Mio, Hong Kong-based senior portfolio manager at Robeco, which oversees about $200 billion in assets worldwide. ``There will be more bad news, particularly for property.''

The Hang Seng Index fell 491.33, or 2.4 percent, to 19,999.78 at the close. All 11 industry groups on the broader Hang Seng Composite Index declined, with about five stocks falling for each that advanced. Stocks pared a loss of as much as 2.6 percent after official data showed China's inflation cooled to the slowest pace since June 2007.

The Hang Seng has retreated 28 percent this year, dragged down by concerns over slowing global growth and more than $500 billion in writedowns and credit losses at financial companies.

Hong Kong billionaire Lee Shau-kee advised the city's stock investors to maintain a defensive stance because the U.S. economy still faces more negative news, the Oriental Daily reported. Lee, who announced in March last year he owns HK$100 billion ($12.8 billion) of stocks, said he is currently neither buying nor selling Hong Kong shares.

Growth Concerns

China's export growth cooled, rising only 21 percent in August compared with 27 percent in July, according to the Customs Bureau. Consumer prices increased 4.9 percent in August from a year earlier, according to the National Bureau of Statistics. The rate was less than the 5.4 percent median estimate by economists in a Bloomberg News survey.

``As inflation concerns subside, the market is increasingly focused not only on whether China's economy is slowing, but by how much,'' said Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co., in an e-mail.

Shimao dropped 5.7 percent to HK$6.35. China Overseas Land fell 11 percent to HK$10.20, after saying August property sales declined 41 percent from July to HK$1.13 billion.

Sino-Ocean, Agile

Sun Hung Kai Properties Ltd., Hong Kong's largest developer which is building a luxury residential project in Chengdu, fell 5.2 percent to HK$92.75. China Vanke Co., Hengda Real Estate Group and Shimao Property Holdings Ltd. are cutting prices at their real estate projects in China by 15 percent to 35 percent, the Oriental Daily reported.

Sino-Ocean Land Holdings Ltd., a Beijing-based real-estate developer, sank 3.7 percent to HK$2.85, after first-half profit fell 48 percent to 541.8 million yuan ($79 million) on lower property revaluation gains.

Agile Property Holdings Ltd., which builds villas and condominiums in China's southern Guangdong province, fell 7.4 percent to HK$4.26, after reporting first-half sales slumped 27 percent from a year earlier.

``The pain for Chinese property developers will continue and is part and parcel of a normal cyclical slowdown,'' said Mark Tan, director at UOB Asset Management Ltd. in Singapore, which oversees about $3 billion in Asian assets. He is ``underweight'' property stocks in Asia.

Jiangxi Copper

Zijin slumped 9.3 percent to HK$3.89, the most since Aug. 5. Gold fell as much as 2.7 percent to $770.70 an ounce on the Comex division of the New York Mercantile Exchange, the lowest since October.

Jiangxi Copper Co., the second-largest Chinese smelter, sank 8.4 percent to HK$9.34. A measure of six metals traded on the London Metal Exchange, including zinc and copper, fell 2 percent yesterday to the lowest since June 27, 2006.

The Hang Seng China Enterprises Index, which tracks so- called H shares, slid 3.1 percent to 10,491.40.

The following shares also rose or fell in Hong Kong. Stock symbols are in parentheses after company names:

Belle International Holdings Ltd. (1880 HK), China's largest retailer of women's shoes, lost HK$0.68, or 9.8 percent, to HK$6.23. First-half profit was little changed at 988 million yuan ($144 million).

China Eastern Airlines Corp. (670 HK), the nation's third- largest carrier, lost HK$0.05, or 3.1 percent, to HK$1.54. Merrill Lynch & Co. cut its price estimate to HK$1 from HK$1.90.

China Shenhua Energy Co. (1088 HK), the country's largest coal producer, fell HK$1.35, or 5.4 percent, to HK$23.50. Coal prices at Qinhuangdao, the nation's benchmark, have fallen 3 percent since a record $168 a metric ton reached on Aug. 8, according to McCloskey Group.

China Cosco Holdings Co. (1919 HK), the world's biggest operator of dry-bulk ships, slumped HK$1.52, or 13 percent, to HK$10.18. The Baltic Dry Index, a measure of commodity cargo rates, tumbled to its lowest in 15 months yesterday, extending its decline from a May 20 record to 55 percent.

Geely Automobile Holdings Ltd. (175 HK), the Chinese maker of $5,000 compacts, gained HK$0.02, or 3.2 percent, to HK$0.65, after first-half profit surged to HK$261 million from HK$82.4 million a year earlier.

To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net