Fears of rate rise hammer HK shares

By Hanny Wan  |   2008-6-14  |     NEWSPAPER EDITION

HONG Kong stocks fell yesterday, dragging the benchmark index to its worst week in three months, led by developers on speculation that banks will lift mortgage rates, denting demand for real estate, Bloomberg News said.

Sino Land Co, a Hong Kong-based developer, had its lowest close in almost three months.

"If there are significant rate hikes, sentiment will worsen," said Renault Kam, a senior portfolio manager at Atlantis Investment Management in Hong Kong, which oversees US$5 billion.

Aluminum Corp of China Ltd, the world's second-biggest alumina producer, declined after Goldman Sachs & Co cut its share-price estimate. Chongqing Machinery & Electric Co, the largest diversified industrial company in the Chinese mainland, tumbled as much as 22 percent on its debut.

The Hang Seng Index lost 431.56, or 1.9 percent, to 22,592.30, extending its drop this week to 7.4 percent. That's the gauge's worst week since the period ending on March 7.

The Hang Seng China Enterprises Index, which tracks so- called H shares of Chinese mainland companies, fell 2.5 percent to 12,213.12, its lowest close since March 31.

Property losses

Sino Land retreated 5.5 percent to HK$16.70 (US$2.14), its worst close since March 20. Cheung Kong (Holdings) Ltd, Hong Kong's No. 2 developer by market value, lost 3.1 percent to HK$113, its lowest close since March 31. Hang Lung Properties Ltd, a Hong Kong-based developer that also invests in the Chinese mainland, fell 1.2 percent to HK$25.90.

The Hang Seng Property Index's 2.6 percent drop made it the biggest percentage group loser on the broader Hang Seng Index.

Hong Kong's banks may lift mortgage interest rates within a few days, the Standard newspaper reported yesterday, citing Hang Seng Bank Ltd Chief Executive Officer Raymond Or.

Aluminum Corp, known as Chalco, fell 2.5 percent to HK$11.08, its worst close since January 31. Goldman lowered its price forecast for the stock by 19 percent to HK$17, according to a research report yesterday.

Chongqing Machinery slumped 19 percent to HK$1.05. The firm sold 1 billion shares at HK$1.30 each, according to a statement.