Hong Kong Stocks Fall; Cosco Pacific Drops on Lower Cargo Rates

By Hanny Wan

Feb. 26 (Bloomberg) -- Hong Kong stocks fell on heightened speculation the economic slump will erode global demand and China will exclude real estate from its stimulus program.

Cosco Pacific Ltd., Asia’s third-largest container-terminal operator, slipped 3 percent after cargo rates dropped for a third day. China Overseas Land & Investment Ltd., a developer controlled by China’s construction ministry, retreated 3.1 percent after the Wen Wei Po newspaper said the nation excluded the property industry from its stimulus program.

“More earnings announcements are on the way so do we want to take the risk right now? I don’t think so,” said John Koh, regional investment director at MEAG Hong Kong Ltd., which manages $1.1 billion. “You can argue that things may not be as bad, but you never know. We’re not taking any bets.” He’s favoring government bonds.

The Hang Seng Index dropped 104.34, or 0.8 percent, to 12,900.74 at the 12:30 p.m. break, after rising as much as 0.5 percent. The Hang Seng China Enterprise Index, which tracks so- called H-shares, slid 2 percent to 7,043.80.

The benchmark Hang Seng Index has lost 10 percent this year, dragging its valuation to 10.5 times estimated earnings, down from 18.7 times at the beginning of 2008.

Cosco Pacific slipped 3 percent to HK$5.88, the third- largest drop on the Hang Seng Index. Pacific Basin Shipping Ltd., Hong Kong’s biggest operator of commodity vessels, slid 3.8 percent to HK$3.51.

Cargo Rates Fall

The Baltic Dry Index, a measure of commodity-shipping rates, fell 2.5 percent yesterday, extending its drop in the past three sessions to 6.6 percent.

China Overseas Land retreated 3.1 percent to HK$10.52. China Resources Land Ltd., a government-controlled developer, dropped 3.3 percent to HK$8.80.

China excluded the property industry from its stimulus program because the government wants to prevent housing prices from rising excessively, Wen Wei Po reported, citing people it didn’t identify. On Feb. 23, the Shanghai Securities News reported without elaboration that real estate would replace energy as the 10th sector to get a stimulus program.

More than two stocks on the 42-member Hang Seng Index declined for each that climbed. February futures slipped 0.2 percent to 12,918.

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

ASM Pacific Technology Ltd. (522 HK), the world’s biggest maker of semiconductor-wiring machines, plunged 5.9 percent to HK$22.50. The company’s fourth-quarter profit dropped 90 percent as orders dried up because of waning chip demand. Net income fell to HK$31.8 million, according to figures Bloomberg derived from full-year earnings the company reported yesterday.

JPMorgan Chase & Co. cut its rating on the stock to “underweight” from “neutral.”

Chinese Estates Holdings Ltd. (127 HK) was suspended, pending a release of an announcement. The stock climbed 0.2 percent to HK$8.55 before trading was halted.

Next Media Ltd. (282 HK) surged 9.8 percent to 90 Hong Kong cents after Chairman Jimmy Lai told the Wall Street Journal he plans to invest more than NT$6 billion ($172.5 million) to start two television stations in Taiwan.

Come Sure Group (Holdings) Ltd. (794 HK), a paper packaging products maker, climbed 2.7 percent to HK$1.15 on its debut, after jumping as much as 7.1 percent. The company sold 70 million shares at HK$1.12 each, according to a statement, raising HK$78.4 million ($10 million).

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