Hong Kong Stocks Drop for First Time in Five Days; Cnooc Falls

By Ian Sayson and Berni Moestafa

Dec. 19 (Bloomberg) -- Hong Kong’s stocks fell for the first time in five days, led by commodity shares, as the deepening global recession sent oil prices to a four-year low.

Cnooc Ltd., China’s largest offshore oil producer, slipped 4.9 percent after crude oil futures dropped below $36 a barrel for the first time since July 2004. HSBC Holdings Plc fell 4.2 percent after analysts at Cazenove said rising loan losses in the global financial system may erode demand for the stock. Cathay Pacific Airways Ltd. soared 6.7 percent on speculation that lower fuel costs will boost earnings.

“A weaker oil price is one of many indicators that show people are concerned about economic growth,” said Anthony Muh, chief executive officer of Asia Pacific at Alliance Trust Asset Management in Hong Kong, which manages about $3 billion in assets.

The Hang Seng Index lost 279.21, or 1.8 percent, to 15,218.60 as of 3:40 p.m., trimming this week’s gain to 3.2 percent. The measure has retreated 45 percent this year as an economic crisis dragged economies worldwide into recession.

The Hang Seng China Enterprises Index, which tracks so- called H shares of mainland companies, fell 55.81 points, or 0.7 percent, to 8,499.25 today.

The main Hang Seng Index is headed for a 9.8 percent gain this month, its first in five months, boosted in part by a 1 percent cut in the key interest rate by the Hong Kong Monetary Authority earlier this week.

Cnooc, China’s largest offshore oil producer, slipped 4.9 percent to HK$7.21, headed for its lowest close this week. PetroChina Co., the country’s largest oil company, lost 1.7 percent to HK$7.13, ending a four-day, 8 percent surge.

Crude Oil Drops

Crude oil fell below $36 a barrel on the New York Mercantile Exchange yesterday, signaling a deepening global recession is sapping demand and countering efforts by the Organization of Petroleum Exporting Countries to boost prices. Oil was at $36.44 a barrel as of 2:48 p.m. in Hong Kong.

Zijin Mining Group Co., China’s largest gold producer, fell 4.7 percent to HK$4.70, The commodity retreated for a second day as falling oil prices and a stronger dollar made the metal less attractive. Yanzhou Coal Mining Co, the nation’s fourth-biggest producer of the fuel, fell 3.7 percent to HK$6.02, its first loss this week, on speculation cheaper oil will weaken demand for alternative fuels.

Cathay Pacific, Hong Kong’s largest air carrier, climbed 6.7 percent to HK$8.94, set for its biggest gain since Oct. 30. Air China Ltd., the nation’s No. 1 overseas carrier, rose 6.6 percent to HK$2.73, headed for its highest close since Oct. 20.

HSBC, Fubon Bank

Declining oil prices prompted China to cut fuel costs for the first time in almost two years, lowering the ex-factory price of gasoline by 14 percent a metric ton, diesel by 18 percent and jet fuel by 32 percent. Fuel accounted for about 40 percent of Chinese airlines’ costs in 2007, according to their annual reports.

HSBC, Europe’s biggest bank, fell 4.2 percent to HK$78.15, set for its lowest close since Nov. 25, after analysts at Cazenove said yesterday Europe’s biggest bank may lose its position as a “safe haven” stock on higher loan impairments in Europe and North America.

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

Fubon Bank (Hong Kong) Ltd. (636 HK), the Hong Kong unit of Taiwan’s second-biggest financial services company, jumped 41 cents, or 20 percent, to HK$2.44. The stock is set for its sharpest advance since Nov. 3 on speculation China and Taiwan will reach agreements on banking and investment ties that will help Fubon to expand. The ruling parties of two regions began a two-day meeting today.

Chinese Estates Holdings Ltd. (127 HK), the Hong Kong developer controlled by billionaire Joseph Lau, jumped 65 Hong Kong cents, or 10 percent, to HK$7.15, heading for its biggest gain since July 4, 2007. Lau agreed to buy about 172.9 million shares in the developer from the Children’s Investment Master Fund, the company said.

Melco International Development Ltd. (200 HK), part-owner of a Macau casino venture, surged 41 cents, or 16 percent, to HK$2.94 on speculation its earnings will get a boost from China’s decision to allow mainland citizens from more cities to visit Hong Kong and Macau.

To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net