Hong Kong stocks reversed most of Friday's losses yesterday amid optimism that healthy residential property sales will underpin developers' earnings. Finance shares were mixed ahead of HSBC's results announcement, which was made just after the market closed. Patrick Chia, head of research at China Everbright Securities, said: 'Property counters have underperformed for a while, certainly underperformed the banking sector. The market for residential units has risen quite strongly, this will help earnings.' The Hang Seng Index added 108.56 points to close at 13,507.28. It shed 147.88 points on Friday. Cheung Kong spearheaded the advance, helping the properties sub-index to add 1.96 per cent to 25,506.54 points. Brokers said that the territory's second-largest developer was taken higher by the prospect of solid sales this month at its Laguna Verde joint-venture project with China Light & Power in Hunghom. Martin Tacon, property analyst at Credit Suisse First Boston, said: 'Cheung Kong is initiating interest in Laguna Verde. I think it will sell. It is a good project.' Sentiment also was helped by the prospect of exceptional gains booked this year by Cheung Kong from the January reorganisation of its sister companies, Hutchison Whampoa and Cheung Kong Infrastructure. Cheung Kong added 3.71 per cent to $76.75, Sung Hung Kai Properties rose 1.39 per cent to $90.75 and Henderson Land Development firmed 2.52 per cent to $71. Mr Tacon said: 'The [property] sector is positive. It was relatively inactive over Lunar New Year . . . We are beginning to see a resurgence of interest.' Great Eagle, the property investment and management group, jumped 6.36 per cent to $30.90 on news that it had cancelled the spin-off of its commercial property operation, Tai Shan Properties. Among finance counters, HSBC closed unchanged at $189, while its subsidiary Hang Seng Bank slipped 50 cents to $89. After trading finished, HSBC reported attributable profit rose 25 per cent to $37.58 billion, in line with market forecasts. Kent Rossiter, senior institutional sales manager at Nikko Securities, said: 'This is the company that has to do better than expectations to move higher as good results were already priced in.' HSBC has risen 15.59 per cent since the start of the year. It peaked last week at $193.50. Oriental Press Group was the biggest gainer among index constituents, adding 8.52 per cent to $3.50 on news that rival media group Next Media had failed to find a sponsor for its listing. Brokers said that trade for the rest of the week would be mixed. Alvin Owyang, associate director at OCBC Securities, said property counters would add to their gains, while banking shares would come under pressure. 'It will be checks and balances,' he said.
