Chinese Estates shares fall after resuming trading
Shares of Chinese Estates Holdings fell as much as 3.3 per cent after resuming trading yesterday following a Macau government warning that it might seize land on which its La Scala development is built.
The shares yesterday opened lower at HK$8.70 before rebounding to HK$9, unchanged from the last trading day on Tuesday. The benchmark Hang Seng Index rose 0.85 per cent to close at 18,678.
On Tuesday, the Macau Government said it might cancel a deal in which jailed public works chief Ao Man-long awarded the land to a company called Moon Ocean, now owned by Chinese Estates, after allegedly receiving HK$20 million from Chinese Estates chairman Joseph Lau Luen-hung and fellow tycoon Steven Lo Kit-sing.
Chinese Estates' share price has dropped 8.5 per cent since Macau's Court of Criminal Instruction on May 23 accepted the accusations of bribery and money laundering against Lau and Lo, chairman of BMA Investment and convenor of the South China soccer club. Both deny the charges and may face trial.
'Chinese Estates shares are still under selling pressure as the court case will drag on for a long time,' said Phillip Capital Management fund manager Li Kwok-suen.
Although the company said it could file an appeal if the site was seized, he said the statement failed to remove the uncertainties surrounding the company's outlook.
'The confiscation of the land will incur a big loss to the company,' he said.
Li believes the shares could drop to HK$8 before finding support in the wake of volatile trading for next several days.
La Scala, the residential project involved in the lawsuit, is fully owned by Chinese Estates.