Hang Seng rise halts two-month tumble

By Chen Shiyin  |   2008-8-1  |     NEWSPAPER EDITION

MOST Hong Kong stocks rose yesterday, helping the key index to its first monthly gain in three, after oil prices jumped, boosting energy suppliers.

Cnooc Ltd, the Chinese mainland's biggest offshore oil producer, climbed the most in four weeks after oil surged more than US$4 a barrel and Credit Suisse Group said recent losses were excessive, Bloomberg News reported. Orient Overseas (International) Ltd, the largest container line in the Hong Kong market, slumped after saying first-half operating profit fell on higher fuel expenses. Air China Ltd retreated on speculation that jet-fuel prices will rise.

The Hang Seng Index added 40.50, or 0.2 percent, to close at 22,731.10, extending Wednesday's 1.9-percent increase. The benchmark advanced 2.9 percent this month, halting a two-month 14-percent retreat and trimming its 2008 decline to 18 percent.

"We're seeing a rebound in Hong Kong stocks after the May and June sell-off," said Louis Wong, a Hong Kong-based fund manager at Phillip Securities Ltd. "How the market performs in the rest of the second half will depend on global economic growth."

The Hang Seng China Enterprises Index, which tracks so-called H shares of Chinese mainland companies, gained 0.3 percent to 12,506.74 yesterday.

Cnooc added 3.7 percent to HK$11.74 (US$1.50) yesterday, its largest gain since July 2. The advance trimmed its July loss to 13 percent. Credit Suisse Group reiterated its "outperform" rating on Cnooc, saying that the stock is trading at "the largest discount" to oil price futures.

"The market might have thrown the baby out with the bath water," Credit Suisse analysts led by Prashant Gokhale wrote in a report yesterday. "Even with a possible oil correction in the fourth quarter of 2008 and first quarter of 2009, Cnooc looks attractively valued."