Real estate up on rate cut report
PRICES of some major real estate stocks soared on hopes of a relaxation in the Government's mortgage policy and lifted the Hang Seng Index of top issues.
The rise showed Hongkong's property sector was far more sensitive to local pressures than to Britain and China's political wrangling.
Several Chinese-language newspapers had quoted Deputy Banking Commissioner Mr Albert Cheok as saying the Government was considering measures for relaxing the current policy.
''The property counters such as Sun Hung Kai and Cheung Kong are probably higher on that news,'' said Mr Alex Tang, research manager at Dao Heng Securities.
At 11.50 am yesterday the Hang Seng Index of top shares was up 48.58 points, or 0.81 per cent, at 6,108.62.
Brokers said the market had shrugged off comments by Chinese Foreign Minister Mr Qian Qichen that the time was not right to meet his British counterpart, Foreign Secretary Mr Douglas Hurd, on Hongkong's plans for political reforms.
The Hang Seng Index closed up 57.91 points at 6,117.95.
Almost a quarter of that gain was due to a $1 climb in the price of real estate group Sun Hung Kai Properties to $31.
In late 1991, the Government put pressure on the territory's major banks to reduce the maximum amount they would lend on a home mortgage to 70 per cent of the property's value, from 85 per cent to 90 per cent, and has so far resisted pressure to lift the ceiling.
''There may be expectations for good results from Sun Hung Kai Properties in the interim stage,'' said Mr Philip Pang, head of institutional sales at Nomura International (HK).
Sun Hung Kai is due to report its first-half net profit on Friday.
Peregrine Brokerage is forecasting the company's aftertax profit will rise by around 33 per cent to $6.22 billion for the whole year.
Other real estate groups to climb in yesterday's trading included Cheung Kong (Holdings), which gained 30 cents to $21.90, and Henderson Land, up 30 cents to $17.
Investors were waiting on news from a meeting of the Executive Council yesterday. It was due to discuss the timetable for tabling a controversial political reform bill which is bitterly opposed by Beijing, but Exco decisions do not have to be made public.
Chinese officials have said once it is tabled there will be no chance of a resumption of talks in the Sino-British dispute focusing on the bill's proposals.
The market would rally if Exco decided against tabling the bill in the immediate future, said Mr Michael Ng, dealing manager at Sassoon Securities.
However, if a firm date were to be announced for the tabling, the index could fall by around 100 points, he predicted.
But even a direct call by a Chinese newspaper for the Governor, Mr Chris Patten's removal failed to dent confidence in property stocks yesterday.
A signed commentary in the Shanghai-based Liberation Daily said Mr Patten's attempts to broaden Hongkong voting rights were a disgrace to Britain's reputation as a democratic and civilised country.
''The British Government's wisest course of action would be to withdraw this colonial remnant, Hongkong Governor Chris Patten,'' the article, signed by an author identified as He Manzi, said.
The article was by far the most personal and vitriolic attack on Mr Patten and his plan to widen Hongkong democracy since he took over as governor last year.
The market's current indifference is in marked contrast to the shocked reaction which followed the Tiananmen Square crackdown in June 1989.
Then, many companies postponed and reviewed expansion plans.