Concerns over the listing's possible cancellation and a sharp increase in oil prices dampen investor sentiment Hong Kong stocks fell slightly yesterday as the possibility that the city's biggest initial public offering of the year will be cancelled appeared more likely. Sentiment was also dampened by a sharp rise in crude oil prices overnight, which weighed on heavy fuel consumers like Cathay Pacific Airways and China Eastern Airlines. Only seven of the 33 blue-chip stocks ended higher. 'The market was adopting a wait-and-see attitude before the Link Reit issue is cleared up, but the sentiment changed quite a lot and the general consensus now seems to be that the chance the listing will proceed is very slim,' Phillip Securities director Louis Wong said. The listing of the government-backed real estate investment trust was still in limbo as the market closed yesterday, after a public housing tenant chose to appeal the High Court's decision on Wednesday to dismiss a suit claiming the listing was unlawful. The Court of Appeal was due to deliver a ruling yesterday, but given the possibility the plaintiff could take the case to the Court of Final Appeal, investors began discounting the risk that the $21.3 billion IPO will not go ahead as scheduled on Monday. 'The Link Reit saga is definitely hurting market sentiment. It's not only affecting Hong Kong's status as a financial centre but also the government's future privatisation plans,' said Christopher Cheung Wah-fung, chairman of both Christfund Securities and the Hong Kong Securities Professionals Association. 'The effect on Hong Kong could be tremendous,' said the sales director at a Chinese brokerage firm. 'Liquidity comes and goes and if somebody else unwinds you unwind,' he said, adding that the large institutions had their clients to answer to and the foreign funds in particular might jump the gun and start selling. But even so, the market proved quite resilient and the Hang Seng Index found enough support below 14,000 to trigger a rebound before the close. It finished at 14,024.63, dropping 0.38 per cent or 53.91 points from the previous day. The H-share index fell 0.35 per cent, or 16.62 points, to 4,762.92. Some brokers said the market held up well because it was expected that any negative affect on the market as a whole from a cancellation of the Link Reit would be quite short-lived. 'At the moment the situation is very unclear so the market is fluctuating a lot, but when everything becomes clear the money will flow back into the market,' a salesman with a local brokerage said. Mr Wong agreed. 'Selling pressure may escalate in the short term, but in terms of valuations and growth expectations for next year, Hong Kong is still attractive,' he said, adding that a test of the 14,300 level was still possible before the end of the year if US markets remain firm. Hutchison Whampoa was the top loser among the blue chips with a 1.75 per cent drop to $70.25. China Mobile gave up 1.5 per cent to $26.20, while HSBC was unchanged at $131.50. Cathay Pacific dropped 0.34 per cent to $14.70 after crude oil futures jumped more than US$2 to US$44.19 in New York on Wednesday and then held steady at those levels during Asian trading. China Eastern Airlines fell 1.73 per cent to $1.70 and Air China retreated 2.33 per cent to $3.15 on its second day of trading. China Southern Airlines bucked the trend with a 0.79 per cent gain. Oil producers failed to benefit from the rise in crude prices, with Sinopec falling 2.38 per cent to $3.075 and PetroChina and CNOOC both finishing unchanged. Computer maker Lenovo Group extended its gains for a second day, edging up 2.17 per cent to $2.35. It was the top HSI gainer yesterday, despite rumours it may place new shares to raise money to help finance the purchase of IBM's global PC business. It lost 14.9 per cent in the four days following the announcement of the deal on December 8. Las Vegas Sands' 61 per cent surge in its overnight debut in New York fuelled a continuation of the rally in local casino stocks. Macau tycoon Stanley Ho Hung-sun's companies - Shun Tak and Melco International - surged 12 per cent and 14.5 per cent respectively after Las Vegas Sands' handsome gain. Medtech Group rose 3.5 cents to 38 cents yesterday, bringing its two-day gain to 46.1 per cent after it said it would buy Macau Grandview Hotel for $500 million.