By Hanny Wan
Dec. 18 (Bloomberg) -- Hong Kong stocks rose for a fourth day, led by developers, on expectations China will cut interest rates and as the nation stepped up measures to support the real estate market.
Hang Lung Properties Ltd., a Hong Kong-based developer that also invests in mainland China, added 3.9 percent after central bank Governor Zhou Xiaochuan said again there is pressure to cut interest rates. Yesterday, the government said it will reduce a tax on home sales. Yue Yuen Industrial (Holdings) Ltd., the world’s largest maker of sports shoes, rose 11 percent after customer Nike Inc. said quarterly profit gained.
For developers, “you’ll get a sentiment bounce,” said Tim Rocks, an Asian equities strategist at Macquarie Group Ltd. in Hong Kong. “Certainly there’s a very strong sentiment factor based on these policy measures being introduced.”
The Hang Seng Index added 37.29, or 0.2 percent, to close at 15,497.81, extending its gains in the last four days to 5 percent. The measure climbed as high as 0.6 percent and declined as much as 1 percent today.
The Hang Seng China Enterprises Index, which tracks so- called H shares of mainland companies, advanced 2.2 percent to 8,555.06.
Stimulus measures have helped the Hang Seng Index climb 41 percent since Oct. 27, when the global economic crisis dragged the index to its lowest level in 4 1/2 years.
‘Slowing Inflation’
Hang Lung climbed 3.9 percent to HK$18.80, its highest close since Nov. 5. China Overseas Land & Investment Ltd., a developer controlled by China’s construction ministry, gained 1.6 percent to HK$11.78, adding to a three-day, 12 percent jump. China Resources Land Ltd., a mainland developer, rose 2.8 percent to HK$10.28. The stock surged 13 percent in the past three sessions. Shimao Property Holdings Ltd., the developer controlled by billionaire Xu Rongmao, rallied 10 percent to HK$6.39.
Chinese central bank Governor Zhou stoked speculation that an interest-rate cut is imminent, saying the pressure for a reduction “is based on the outlook for inflation.” Zhou said on Dec. 16 that rates may fall further, after inflation cooled in November to 2.4 percent, the weakest pace in 22 months.
China also said yesterday it will reduce a tax on home sales. The tax will now be on sale profits instead of prices, the State Council said yesterday. The levy will be waived on properties sold two years after purchase, down from five years previously.
The government last month cut interest rates by the most in 11 years, and announced a 4 trillion yuan ($585 billion) economic stimulus package running through 2010.
Yue Yuen
Yue Yuen surged 11 percent to HK$15.40, its sharpest jump since Dec. 13, 2007. Nike’s second-quarter profit rose 8.8 percent to $391 million, helped by performance in Europe and Asia. Sales advanced 5.8 percent, Nike said yesterday.
Hong Kong shares fell earlier on concern the global credit crisis will deepen after Morgan Stanley marked down the value of mortgages and loans.
HSBC Holdings Plc, Europe’s biggest bank, retreated 3.4 percent to HK$81.60. Bank of China Ltd. slipped 1.7 percent to HK$2.38. The company in October posted the slowest profit growth in two years as credit-market losses increased and loan demand declined in China.
Losses and writedowns from the credit crisis surpassed $1 trillion yesterday. Markdowns by Morgan Stanley and Goldman Sachs Group Inc. this week brought losses by financial firms in the U.S. to $678 billion since last year, while European banks and insurers have written down $300 billion, according to data compiled by Bloomberg.
Almost three stocks on the 42-member Hang Seng Index advanced for each that dropped. December futures slipped 0.8 percent to 15,400.
The following stocks rose or fell. Stock symbols are in parentheses after company names.
Oil-related stocks: Cnooc Ltd. (883 HK), China’s largest offshore oil producer, lost 42 cents, or 5.3 percent, to HK$7.58, the biggest decline on the Hang Seng Index.
China Eastern Airlines Corp. (670 HK), the nation’s third- largest carrier, surged 10 cents, or 9.8 percent, to HK$1.12. Air China Ltd. (753 HK), the nation’s biggest international airline, rose 7 cents, or 2.8 percent, to HK$2.56. Fuel accounted for more than 40 percent of Air China’s operating costs this year, the company said last month.
Crude oil futures tumbled 8.1 percent to $40.06 a barrel in New York yesterday, the lowest settlement since July 13, 2004. The contract was at $40.31 as of 4:46 p.m. in Hong Kong.
The price of jet fuel, a product of crude oil, has dropped 44 percent this year through yesterday.
Alco Holdings Ltd. (328 HK), a supplier of consumer electronics for customers including Wal-Mart Stores Inc., soared 28 cents, or 23 percent, to HK$1.49, its biggest jump since July 15, 2003. David Webb, an investor activist whose stock recommendations have outperformed Hong Kong’s benchmark stock index in seven of the past nine years, named Alco as his “Christmas Pick” on the company’s prospects to gain market share. Webb owns more than 5 percent of the company, he said.
China Communications Services Corp. (552 HK), the country’s biggest builder of phone networks, slipped 25 cents, or 5 percent, to HK$4.72. Cisco Systems Inc., the world’s biggest maker of networking equipment, is offering to sell 90 million China Communications shares at between HK$4.27 and HK$4.50 each, according to a sale document sent to investors.
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net
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