Oct 20, 2008
HK shares jump 4 pct; Esprit drops on weak outlook
Oct 20, 2008
* HK shares rebound from three-day, 13.5 pct sell-off
* Chinese properties rally on hopes of support measures
* Fashion retailer Esprit drops on weak forecast
(Updates to midday)
By Parvathy Ullatil
HONG KONG, Oct 20 (Reuters) - Hong Kong shares jumped 4.3 percent on Monday, as blue chips bounced back from Friday's three-year closing low while Chinese property stocks cheered government steps to support the sector.
"Sentiment has improved as interbank rates have started to ease significantly," said Alex Wong, director with Ample Finance Group.
"This shows that the measures taken by central banks across the world are starting to reflect in the real world."
Chinese property stocks gained after state media reported that Beijing had endorsed local measures to stabilise the real estate market and would work out a nationwide policy based on their results, state media reported on Monday.
China Overseas Land Investment rallied 12.9 percent, while Guangzhou R&F Properties soared 10.7 percent.
But Esprit Holdings , the world's No.5 fashion retailer bucked the trend to drop 4.3 after a CLSA report last week said the company may scrap its share buyback plan to focus on paying dividends. The stock has dropped more than 16 percent since Oct. 14 and fell to a four-year low of HK$40.15 on Monday.
The report also quoted Esprit chief executive Heinz Krogner as saying that growth at the company's wholesale division would be close to zero in the next fiscal year.
Another fashion retailer, Giordano , dropped 4.1 percent despite a Merrill Lynch upgrade on the stock after half a dozen local retailers and apparel manufacturers appointed liquidators due to tight credit amid the global financial turmoil.
The benchmark Hang Seng Index .HSI ended the morning session 631.70 points higher at 15,185.91.
Shares in Asia's largest refiner, Sinopec Corp , climbed 9.8 percent. Deutsche Bank raised its operating profit margin on the stock by 39.1 percent on lower crude oil price estimates.
Mainboard turnover stood at HK$27.7 billion ($3.6 billion), easing slightly from HK$27.9 billion at midday on Friday.
The China Enterprises Index .HSCE of top locally listed mainland Chinese companies rose 4.7 percent to 7,339.67.
Shares in Dah Sing Financial slid 8 percent after it confirmed late on Friday its unit, Dah Sing Bank, was being investigated by Hong Kong authorities for alleged misconduct in the sale of Lehman Brothers investment products.
Dah Sing Banking Group , of which Dah Sing Bank is a part, tumbled 9.4 percent.
More than 30,000 Hong Kong investors lost money on a reported $2 billion in credit-linked notes, known as mini-bonds, from failed U.S. investment bank Lehman that had been sold via local lenders.
Cement producer Anhui Conch fell 4.8 percent after analysts forecast a gloomy earnings outlook for the company.
"The current weak property market, sluggish cement pricing environment especially in southern China, surge in spot coal price in July/August in China and third-quarter low season effect all lead us to believe that Conch's third-quarter results could be below market expectations," JP Morgan analyst Nick Lai wrote in a note to investors on Friday.
The U.S. investment bank said the company's third-quarter earnings were likely to come in 20 percent lower than the second quarter. JP Morgan also cut its 2008 profit forecast by 8 percent and that for 2009 by 18 percent. (Reporting by Parvathy Ullatil; Editing by Anne Marie Roantree)
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