25 May 2019

Bad news for property plays weighs on HSI

Hong Kong’s benchmark index had a choppy trading session Thursday as property developers tumbled on news that land supply will balloon next quarter.

The Hang Seng Index climbed 261 points out of the gate in response to the US Federal Reserve’s plans to scale back bond-buying by US$10 billion a month to US$75 billion. But market sentiment turned swiftly and the index gave up all its gains, falling as much as 390 points, or 1.7 percent, as the Hong Kong government said land supply will increase 67 percent next quarter from the previous three months. The index ended the day 255 points, or 1.1 percent, lower.

Deutsche Bank also released a report saying it expected the Hong Kong housing market to have a major price adjustment next year. All five major property developers had notable declines, including Hang Lung Properties (00101.HK) which fell 4.6 percent and New World Development (00017.HK) which shed 2 percent.

Other plays including The Wharf (Holdings) (00004.HK), Cheung Kong Holdings (00001.HK) and Sun Hung Kai Properties (00016.HK) fell in a range of 0.6-1.7 percent.

The Hang Seng China Enterprises Index, the main gauge for H shares, slipped 1.68 percent to 10,777, while the Shanghai Composite Index dropped 0.95 percent to 2,127 points.

Only six of the 50 blue chips rose Thursday. Insurers, gaming and banking plays came under waves of selling pressure. Ping An Insurance Group (02318.HK) and Sands China (01928.HK) both lost more than 3 percent.

But the gas sector fared much better. China Resources Gas (01193.HK) rose 2.9 percent on the day to a record high and ENN Energy Holdings (02688.HK) achieved the same feat with a 2.2 percent increase.

China WindPower added 5.3 percent after power plant operator Huadian Fuxin agreed to spend HK$378.4 million (US$63 million) on a 9.9 percent stake in the renewable energy firm.

Funeral services firm Fu Shou Yuan International Group (01448.HK) crowned its trading debut Thursday by becoming the third-best performing IPO this year. The counter ended the session 44 percent above its offering price, trailing only web-based games developer Forgame Holdings (00484.HK) and China Conch Venture Holdings (00586.HK).

– Contact the writer at [email protected]



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