Hong Kong Stocks Rise, Led by Sun Hung Kai; Li & Fung Declines

Hong Kong stocks rose, with Sun Hung Kai Properties Ltd., leading developers higher as a U.S. housing report and a separate note from Credit Suisse Group added to speculation borrowing costs will fall, fueling property demand.

"Property is the only theme in the market" to play on lower interest rates, said Steven Leung, a Hong Kong-based director of institutional sales at UOB-Kay Hian Ltd.

The Hang Seng Index advanced 339.56, or 1.3 percent, to 27,452.46 as of 3:10 p.m. local time. It slid as much as 1.3 percent in the morning session. The Hang Seng China Enterprises Index, which tracks 43 "H shares" of Chinese companies added 1.8 percent to 15,946.85.

Li & Fung Ltd. led exporters lower after the U.S. home sales report fueled concern growth in the world's biggest economy is slowing. Disappointing U.S. manufacturing and jobs reports helped drag the Hang Seng down by 1.4 percent this year.

Hong Kong real-estate developers by contrast are benefiting on speculation that the city's rates will move follow the U.S. because the city's currency is pegged to the dollar. Cheaper mortgages spur investors to buy real estate. An index of the Hang Seng's property stocks has risen 1.8 percent this year.

Trading in interest-rate futures indicate a 68 percent chance that the Fed will lower its key rate to 3.75 percent from 4.25 percent at a Jan. 30 policy meeting.

Sun Hung Kai, Hong Kong's largest developer by market value, climbed HK$4.50, or 2.7 percent, to HK$173.30. Cheung Kong, Hong Kong's second-biggest developer by market value, rose HK$2.80, or 2 percent, to HK$145.40.

Slowing U.S. Economy

Credit Suisse analysts including Clifford Lam lifted their share-price targets on developers including Cheung Kong and Sun Hung Kai, citing lower rates. Cheung Kong was among their top picks, a report dated today said.

Li & Fung Ltd., a sourcing company that relied on the U.S. for over 70 percent of its revenue in 2006, dropped 85 cents, or 3 percent, to HK$27.10. Esprit Holdings Ltd., which sells clothes in more than 40 nations, fell HK$2.20, or 2 percent, to HK$105.40.

In the latest sign of a U.S. slowdown, the National Association of Realtors' index of pending home sales fell 2.6 percent in November, following a 3.7 percent gain the previous month.

Thirty-five stocks on the 43-member Hang Seng Index advanced, while 7 rose. January futures climbed 1.4 percent to 27,544.

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

Gold miners: Zhaojin Mining Industry Co. (1818 HK), which had the biggest initial public offering by a Chinese gold miner, jumped HK$2.85, or 7.6 percent, to HK$40.35. Zijin Mining Group Co. (2899 HK), owner of China's biggest gold mine, advanced 38 cents, or 3 percent, to HK$13.16.

Bullion for immediate delivery today climbed as much as 1.5 percent to a record $891.39 an ounce.

China Eastern Airlines Corp. (670 HK), the nation's third- biggest carrier, added 5 cents, or 0.8 percent, to HK$6.71 after a one-day suspension. Shareholders rejected Singapore Airlines Ltd.'s bid for a stake, clearing the way for Air China Ltd.'s (753 HK) parent to make a higher offer and become the nation's dominant carrier.

Air China, the nation's most profitable carrier, lost 21 cents, or 2.1 percent, to HK$9.99.

Lenovo Group Ltd. (992 HK), the world's third-biggest maker of personal computers, plunged 69 cents, or 11 percent, to HK$5.87, the biggest slide since Nov. 10, 2006. CLSA analyst Jenny Lai cut her rating to "sell" from "outperform," citing higher costs and slower sales growth, according to a report today.

Parkson Retail Group Ltd. (3368 HK), a Beijing-based department store chain controlled by Malaysia's Lion Group, gained 80 cents, or 1 percent, to HK$83.60. A target for the company's share price was raised to HK$115 from HK$81 at Credit Suisse, according to a report. Separately, Parkson Holdings Bhd, Parkson Retail's biggest shareholder offered to sell 8 million shares at HK$78.66 each.