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Stocks

Hong Kong shares tumble as property companies retreat

HONG KONG (NewsRise) -- Hong Kong stocks slid to a three-month low Monday, led by losses in property developers and Internet major Tencent Holdings, amid concerns the U.S. Federal Reserve may raise interest rates next month.

The benchmark Hang Seng Index declined 1.4% to 22,222.22 points, with 48 of its 50 constituents lower. The Hang Seng China Enterprises Index of large mainland companies listed in Hong Kong lost 1% to 9,342.87.

Property developers came under pressure Monday as interest rates in Hong Kong, where the local currency is pegged to the U.S. dollar, move in tandem with borrowing costs in the world's largest economy.

Hang Lung Properties fell 1.6% to HK$16.36 and Link Real Estate Investment Trust retreated 2.4% to HK$51.80. The Hang Seng Property Index, a measure of real estate stocks traded in the city, shed 2.4% to its lowest level since July.

Local stocks derived little support from data released Monday that showed China's fixed-asset investments expanded more than expected in the first ten months of the year.

"I think there is a good chance that there will be a rate hike in the U.S. next month and interest-rate sensitive stocks in Hong Kong are under pressure,'' said Linus Yip, strategist at First Shanghai Securities in Hong Kong. "Sentiment is still on the weak side and as for the Hang Seng Index, there is a chance it will edge lower. The 22,000 level should provide good support.''

The U.S. Fed, which has held interest rates steady since an increase last December, will review monetary policy on Dec. 13 and Dec. 14. Expectations that U.S. President-elect Donald Trump's economic policies will fuel inflation have boosted hopes of a rate hike next month.

The U.S. benchmark S&P 500 edged 0.1% lower Friday, but rose 3.8% last week. U.S. stock futures pointed to a higher opening on Wall Street. In the rest of Asia Monday, Japan's Nikkei 225 closed 1.7% higher, while South Korea's Kospi slipped 0.5%.

The Shanghai Composite Index advanced 0.4% to 3,210.37 points, extending gains after it entered a technical bull market on Friday, having risen more than 20% from a January low.

Government data released on Monday showed China's fixed-asset investment expanded 8.3% in the January to October period, compared with an 8.2% increase projected in a Reuters' survey of economists.

China's retail sales for October climbed 10% from a year earlier and monthly industrial output increased 6.1%, both below estimates.

HSBC Greater China economist Julia Wang said the biggest surprise in Monday's economic data was the moderation in the retail sales growth, which she attributed to a smaller advance in monthly car sales compared with September.

Still, "this looks more like normalization after the summer bounce, rather than a reflection of overall consumption," she wrote in a report. "With underlying income growth remaining robust, consumption should stay supported.''

The decline in Hong Kong shares also came after government data released late Friday showed the city's economic growth slowed last quarter amid anemic retail sales and weak tourist arrivals.

Among other decliners on the Hang Seng index, China Petroleum & Chemical (Sinopec) dropped 1.7% to HK$5.33 Monday, while PetroChina fell 1.2% to HK$5.13 as U.S. crude oil prices traded below $44 a barrel.

Internet services major Tencent Holdings, among the largest weighted stocks on the Hang Seng Index, sank 3.7% to HK$192.60.

-- V. Phani Kumar

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