Hong Kong index slips on US concerns; property stocks remain strong

Hong Kong shares slipped Wednesday on renewed concerns about the U.S. economy, although local property stocks remained resilient on expectations that further rate cuts would boost homes sales.

The benchmark Hang Seng Index dropped 252.13 points, or 0.9 percent, to 27,560.52 in its first trading day after the New Year holiday.

Analysts said economic data out of the U.S. this week would be a key indicator as to the direction the local bourse would take.

In particular, non-farm payrolls data may lead to sharp swings as the jobs report will provide a crucial reading on the chances of the U.S. economy sliding into recession, said Castor Pang, a strategist with Sun Hung Kai Financial.

On Monday, the Dow Jones fell 101.05 points, or 0.76 percent, to close the year at 13,264.82.

In Hong Kong, property stocks remained strong on expectations the U.S. will continue to cut lending rates. Also, analysts have forecast that local property prices will rise by 15-20 percent in 2008.

The local currency is pegged to the U.S. dollar and Hong Kong banks usually match rate cuts by the U.S. Federal Reserve, boosting property stocks on expectations that people will take out mortgages to buy homes.

Leading the day's gains was MTR Corp., which jumped 7.3 percent to HK$30.80.

MTR "is the single largest developer in Hong Kong in terms of land bank," said Pang. He said he expects the company's earnings in 2008 and 2009 to be very strong on a list of new property development projects along its railway lines.

New World Development rose 2.53 percent to HK$28.35, Sun Hung Kai Properties gained 0.72 percent to HK$166.80 and Henderson Land climbed 0.14 percent to 73.55 percent.

China-related companies were the day's biggest decliners. China Overseas lost 2.9 percent to HK$15.66, Citic Pacific fell 2.3 percent to HK$42.55 and PetroChina shed 2.2 percent to HK$13.60.

Bucking the trend, China Eastern Airlines jumped 4.4 percent to HK$8.05.

China National Aviation Holdings said Tuesday an offer from Singapore Airlines and Temasek Holdings for a 24 percent stake in China Eastern doesn't reflect the airline's fair value, and that it reserves the right to make future offers.