By Hanny Wan
Feb. 18 (Bloomberg) -- Hong Kong stocks fell, dragging the benchmark Hang Seng index to the lowest in more than three weeks on signs the global recession is deepening.
Hang Lung Properties Ltd., Hong Kong’s fourth-largest developer by market value, slumped 4.8 percent after the city’s unemployment rate rose to the highest in 28 months, heightening concern demand for real estate will slow. Aluminum Corp. of China Ltd., the nation’s No. 1 producer of the metal, lost 3.2 percent and PetroChina Co., the country’s largest oil producer, retreated 3.2 percent after metal and oil prices slumped.
“Hong Kong’s continual downslide is just indicative of global sentiment,” said Christian Kielland, managing director of brokerage BTIG Hong Kong Ltd. “There seem to be zero catalysts in the future to give the market legs.”
The Hang Seng Index dropped 202.16, or 1.6 percent, to 12,743.24 as of the 12:30 p.m. break local time, taking its slide in the past three days to 6 percent. The benchmark gauge is headed for its lowest close since Jan. 23. The Hang Seng China Enterprise Index, which tracks so-called H-shares, retreated 1.6 percent to 7,081.15.
Both indexes have slumped more than 10 percent this year as the deepening global slowdown caused corporate profits worldwide to sink. Hong Kong’s economy, which slid into a recession in the third quarter of last year, may deteriorate in 2009 because of the crisis, Financial Secretary John Tsang said Feb. 6.
The city’s unemployment rate for the three months through January climbed to 4.6 percent, the government said yesterday, up from 4.1 percent through December. That was more than the 4.3 percent median estimate of economists in a Bloomberg News survey.
Falling Home Prices
Hang Lung Properties slumped 4.8 percent to HK$14.04. Sun Hung Kai Properties Ltd. lost 3.5 percent to HK$60.10. The Hang Seng Property Index, which tracks six developers, dropped 3 percent, taking its slump this year to 12 percent amid concerns real-estate demand will drop.
Home prices on the Peak, Hong Kong’s most expensive residential area, tumbled 31 percent in the fourth quarter from a year earlier, real estate agency CB Richard Ellis Group Inc. said yesterday.
Chalco, as Aluminum Corp. is known, fell 3.2 percent to HK$3.93. PetroChina dropped 3.2 percent to HK$5.81. Cnooc Ltd., China’s largest offshore oil producer, dropped 2.2 percent to HK$6.74.
Concern the global economic slump will deepen drove down commodity prices. Crude oil tumbled 6.9 percent to settle at $34.93 a barrel in New York, the steepest drop since Jan. 27. Copper futures slumped 7.2 percent, the most since Oct. 30.
All but nine stocks on the 42-member Hang Seng Index declined. February futures slipped 1.5 percent to 12,690.
The following stocks rose or fell. Stock symbols are in brackets after company names.
China Cosco Holdings Co. (1919 HK) rose 1.1 percent to HK$4.74. The world’s largest dry-bulk carrier was raised to “outperform” from “neutral” at Macquarie Group Ltd. on the view that dry bulk lo1sses may be limited by an agreement with its parent company.
Hang Seng Bank Ltd. (11 HK) lost 1.6 percent to HK$83.70. Hong Kong’s second-largest bank by assets completed the purchase of a 20 percent stake in China’s Yantai City Commercial Bank Co. for 800 million yuan ($117 million). Hang Seng will nominate directors to Yantai Bank after becoming its largest shareholder, the bank said yesterday.
Lenovo Group Ltd. (992 HK) dropped 2 percent to HK$1.46. The personal-computer maker will continue to consider merger and acquisitions, and plans to be more aggressive in developing sales in emerging markets such as India, Russia and Brazil, the South China Morning Post reported, citing Chief Executive Officer Yang Yuanqing.
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net
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