Hong Kong stocks fell for a second day, reversing gains as developers dropped on concern measures to rein in property prices are slowing the real estate market and mainland-based banks retreated.
The Hang Seng Index (HSI) dropped 0.4 percent to 23,237.69 at the close after gaining as much as 1.3 percent. The Hang Seng China Enterprises Index slid 1 percent to 12,804.77.
"People are still very cautious on Hong Kong's local property market," Steven Leung, director of institutional sales at UOB-Kay Hian Ltd. "For the mainland, speculation and worries remain about another potential interest rate hike, and equity market won't perform well until we see the final decision from the government."
Henderson Land sank 1.1 percent to HK$53.85 after Executive Director Augustine Wong said at a forum government measures to rein in property prices and curb speculation in Hong Kong have had some impact on property prices. Sino Land Co sank 1.8 percent to HK$16.08. Sun Hung Kai Properties Ltd declined 1 percent to HK$129.50.
Residential transactions may fall by as much as 35 percent in 2011 from 2010, Midland Holdings Ltd said last week. The government on November 19 increased minimum down payments on homes costing more than HK$8 million ($1 million) and imposed additional stamp duties on all units bought after November 20 and resold within two years as home values soared more than 50 percent since January 2009.
A measure of property stocks had the biggest drop among the HSI's four industry groups, followed by banks.
Mainland banks dropped on concern the government will take more steps to curb inflation. China Construction Bank slipped 1.8 percent to HK$6.97, while Industrial & Commercial Bank of China Ltd fell 1.3 percent to HK$5.90. The four biggest drags on the HSI were mainland banks.
Inflation on the mainland is likely to stabilize next year as tepid demand abroad damps economic growth at home, allowing the nation's central bank to gradually withdraw monetary stimulus, said UBS AG chief Asian economist Duncan Wooldridge in an interview Monday.
Separately, the People's Bank of China may raise rates at a "gradual and slow" pace next year and order higher reserve requirements for banks to counter capital inflows, Li Daokui, an adviser to the central bank, said in an interview on December 3.
"Hong Kong has to monitor the monetary policy direction on the mainland much more so than some of the other Asian markets," said Khiem Do, the Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management (Asia) Ltd.
Commodity producers led gains before being overshadowed by banks and developers. Cnooc increased 2.4 percent to HK$18.16 and was the biggest positive contributor to the HSI. Jiangxi Copper Co jumped 2.3 percent to HK$24.65.
Crude oil for January delivery advanced 1.4 percent in New York on December 3 to $89.19 a barrel, the highest settlement since October 7, 2008, as the dollar tumbled and boosted the appeal of commodities as an alternative investment. Copper rose 0.5 percent on December 3, while gold futures advanced 1.2 percent.
Thirty-two stocks fell while 13 rose on the 45-member HSI. Futures on the gauge lost 0.4 percent to 23,173.
source:www.chinadaily.com
