HK stocks drop 1.9% on home price concern

TOKYO/HONG KONG: Hong Kong’s benchmark stock index fell the most in three weeks, led by developers, on concern the city’s tightening of downpayment requirements for luxury homes will damp demand.

Sino Land Co plunged 5.4% and Henderson Land Development Co dipped 4.3%, leading declines among property stocks. CNOOC Ltd, China’s biggest offshore oil producer, dropped 3.4% after crude oil prices fell on Monday in New York.

“We’re a bit cautious because there are uncertainties as to what the government is going to do next, whether they will increase land supply or not to ensure appropriate adjustments in property prices,” said John Koh, regional investment director at MEAG Hong Kong Ltd, which manages US$1.1 billion (RM3.74 billion). “A correction is inevitable in both property prices and developers’ share prices.”

The Hang Seng Index (HSI) slid 1.9% to close at 22,169.59, its biggest drop since Oct 2. The Hang Seng China Enterprises Index, which tracks so-called H-shares, slipped 1.3% to 13,145.59.

The HSI has surged 95% from a low for the year on March 9 as stimulus measures revived economies around the world. Shares on the gauge are priced at an average 17.8 times estimated profit, up from 10.6 times at the start of 2009, according to data compiled by Bloomberg.

Henderson Land, controlled by billionaire Lee Shau-kee, slid 4.3% to HK$52.90 (RM23.22). Sino Land, this year’s best performer on the Hang Seng Property Index, fell 5.4% to HK$15.52. Sun Hung Kai PROPERTIES [] Ltd, Hong Kong’s No 1 property developer by market value, dropped 3.4% to HK$118.20. Cheung Kong (Holdings) Ltd, the second biggest, slipped 3% to HK$102.30.

The Hang Seng Property Index’s 3.6% decline was the sharpest among the four industry groups in the Hang Seng Index.

The Hong Kong Monetary Authority (HKMA) tightened down-payment requirements for luxury homes on Oct 23 for the first time since 1991 to curtail property speculation after record-low interest rates fuelled a surge in prices this year. Down payments for homes priced above HK$20 million will be raised to 40% from 30%, HKMA chief executive Norman Chan said.

John Tsang, the city’s financial secretary, will meet developers later yesterday to discuss issues such as land supply, the South China Morning Post reported yesterday, without citing anyone. Patrick Wong, a spokesman at Tsang’s office, declined to comment when contacted yesterday. The group will include Cheung Kong deputy chairman Victor Li and Sun Hung Kai vice-chairman Thomas Kwok, according to the Hong Kong Economic Journal (HKEJ).

Cnooc declined 3.4% to HK$12.46. PetroChina Co, the nation’s largest oil producer, fell 2.1% to HK$10.26.

Crude oil futures dropped 2.3% to US$78.68 a barrel in New York on Monday, the biggest decline since Sept 24. The contract was recently at US$78.81 in after-hours trading.

All but five stocks on the 42-member Hang Seng Index dropped. October futures slipped 1.8% to 22,191.

Anta Sports Products Ltd retreated 5.4% to HK$10.14. The athletic shoes maker said on Monday chairman Ding Shizhong and other controlling stockholders hired Morgan Stanley to place 80 million existing shares at HK$10 each, and will use the money to set up a charitable fund.-- Bloomberg