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Stocks

Developers stand out as Hong Kong stocks return to 23-month highs

HONG KONG (Nikkei Markets) -- Hong Kong stocks climbed to reclaim 23-month highs on Tuesday as an improving price outlook bolstered property developers.

The Hang Seng Index added 0.5% to 25,997.14. Eight of the day's top nine gainers on the 50-stock gauge were real estate names. New World Development jumped 7.4%, its steepest gain in almost eight years, while Sun Hung Kai Properties climbed 4.9% and China Overseas Land & Investment added 2.4%. A sub-index of real estate companies listed in the city rallied 2.5%, the most since September.

"Residential property sales in Hong Kong continue to be robust and the rising land prices are also providing a boost to the local developers," said Siu Fung Lung, an analyst at CIMB Investment Bank.

Hong Kong property prices and sales have so far endured measures by policy makers to rein in prices, which are amongst the highest in the world. New home sales in Hong Kong climbed to their highest level in 21 years in April, according to media reports citing data compiled by Centaline Property Agency. Also, local government data show private domestic home prices are currently at a record high.

Referring to the rally by Chinese developers, Siu said that the "advance is being helped by southbound buying. Mainland investors follow the monthly sales data closely and the numbers suggest that there has not been much of an impact from the tightening measures undertaken since the last quarter of 2016."

In Tuesday's trading, Future Land Development Holdings jumped 12% after its May contracted sales more than doubled from a year ago. Sunac China Holdings added 0.6% following a more than 90% jump in monthly sales. Kaisa Group Holdings rose 1.5% following a 43% surge in last month's contracted sales.

China Evergrande Group climbed 4.8% to a record high after the property giant said it will redeem all its perpetual capital instruments by the end of June as part of efforts to pare its debt.

Next Digital tumbled 4.3% after saying it expects an increase in loss for the year ended March 31.

Geely Automobile Holdings slid 2.1% to HK$14.10 after Daiwa Capital Markets downgraded the automaker to "outperform" from "buy," saying there were "no near-term catalysts to support a further share-price rally." Geely shares are still up more than 90% so far in 2017. Daiwa, however, increased the stock's target price to HK$15.50 from HK$13.

CK Hutchison Holdings added 0.8%. The conglomerate said late Monday that it will redeem HK$1 billion ($128 million) of perpetual securities.

Dickson Concepts (International) added 3.6%. Late Monday, the luxury-goods retailer reported a profit of HK$80.2 million for the year ended March 31 as compared to a loss in the year before.

Hidili Industry International Development sank 4%. Two of its units have received summons from a court in Sichuan province, in relation to an amount of 268 million yuan ($39 million) in outstanding principal and interest that they owe Shanghai Pudong Development Bank, the coal miner said late Monday.

-- Nimesh Vora & V. Phani Kumar

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