HK shares edge up on property, Shanghai gains

Friday, 25 February 2011 02:27 - - {{hitsCtrl.values.hits}}

HONG KONG/SHANGHAI, (Reuters) - Hong Kong stocks were slightly higher by midday Thursday, bolstered by property plays, while coal miners buoyed Chinese markets on expectations that surging oil prices may lift demand for alternative energy sources.

The benchmark Hang Seng Index was up 0.07 percent at the midday trading break in modest turnover, after paring earlier gains. The China Enterprises Index of top locally listed mainland companies was flat.

Relief over the lack of severe property market cooling measures in Hong Kong’s budget address on Wednesday spurred short-term gains in property issues, but concern over escalating oil prices weighed on the broader market, analysts said.

“Higher oil prices are going to affect everybody, and of course the transport sector including airlines,” said Fulbright Securities general manager Francis Lun in Hong Kong.

Oil prices hit a 2- year peak on Thursday on concern that political unrest in OPEC-member Libya could spread to other major producers in the region including Saudi Arabia.

Investors were likely to pile into the resource sector such as gold and upstream oil producers, as long as oil prices remain at recent highs, Lun said.

Hong Kong’s property sub-index was up 1.04 percent.

Sun Hung Kai Properties Ltd, Asia’s largest developer by market value, rose 2.2 percent. Cheung Kong (Holdings) Ltd, property flagship of billionaire Li Ka-shing gained 0.9 percent.

Real estate prices in the financial hub, among the highest in the world, could climb a further 15 percent this year.. Prices have climbed about 60 percent since 2009.

Stronger oil prices bolstered upstream-focussed CNOOC Ltd, up 0.9 percent.

Transport issues weighed, with shipping company Cosco Pacific Ltd the biggest percentage loser by midday, down 3.4 percent.

Cathay Pacific Airways Ltd, Asia’s No.4 carrier by market value, slipped 0.7 percent.

MINERS STRONG

China’s main stock index was up 0.3 percent at midday Thursday, led by coal issues. But trading was thin as investors remained cautious over the global economic outlook and the possibility that higher oil prices could boost imported inflation in China. The benchmark Shanghai Composite Index was at 2,870.7 points, after a 0.3 percent rise on Wednesday. “Overseas markets add more uncertainties for our market, which has made investors take a cautious attitude,” said Guotai Junan Securities senior analyst Xu Yinhui in Shanghai. “Overall, macro-economic policy is the key for the market.” Almost all 32 coal-related companies listed on the Shanghai and Shenzhen markets rose. Shanxi Coal International Energy Co Ltd rose 3 percent, while Taiyuan Coal Gasification Co was up 5.3 percent.

Oil companies rebounded after falling in the past two sessions, with PetroChina Co Ltd, the biggest company by market value, up 1 percent and China Petroleum & Chemical Corp (Sinopec) rising 0.4 percent.

Analysts said the bounce was due to technical reasons and high crude oil prices would hurt these companies earnings over the longer term.