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SCMP Reporter

Stocks edged higher for the eighth day in nine yesterday as data showed the  economy grew at a faster-than-expected pace in the third quarter and a report revealed a strong start to the holiday shopping season in the United States.

The upside for the blue chip counters was fairly modest, however, as most of the buying activity happened elsewhere, notably in  Link Reit and in  H shares, which benefitted from the  global appetite for commodities.

Some observers said  blue chips were quiet before  the expiry of  November Hang Seng Index futures contracts today and a string of economic indicators due out in the US  after the Thanksgiving holiday.

It  was also held back by a 4.39 per cent drop in Esprit Holdings which adjusted downward as it  traded without the right to a $1.50 dividend. The stock fell another  $1 to  close $2.50 lower at $54.45, trimming 9.53 points off the index.

The Hang Seng Index finished up 0.12 per cent, or 18.53 points at 15,100 points after trading in a  60.33-point range during  the day.

The November futures ended at a premium to the cash market at 15,124 points while the December futures contract ended at 15,158.

Turnover fell 27.41 per cent from the previous session to $16.78 billion.

Index heavyweight China Mobile rose 0.66 per cent to $38.25 while HSBC was up 0.08 per cent to $125.40.

Li & Fung, which derives most of its revenue from sourcing goods for the US consumer market, gained 1.57 per cent to $16.10. The National Retail Federation said US retailers recorded a 22 per cent jump in sales over the Thanksgiving holiday from the same period last year, putting the industry on track for its second-biggest holiday selling season since 1999.

Link Reit also continued to  support  the market, as its shares  gained a further  3.81 per cent to $12.25, following the 14.56 per cent surge in Friday's trading debut. Units worth $2.28 billion changed hands, which translated into 13.59 per cent of  market turnover and made it the most actively traded counter in value terms.

The strong demand, said to come mainly from non-Hong Kong fund managers allocated a comparatively small part of the $19.8 billion initial public offering, has taken most market watchers by surprise.

The buying has effectively pushed down the real estate investment trust's divided yield for fiscal 2007 to 5.04 per cent from 6 per cent in just two days, making further upside  less likely in the near term. Retail investors who bought at  a 5 per cent discount are  sitting on a return of 25.25 per cent, $1,235 per board lot.

Kenny Tang Sing-hing, an associate director at Tung Tai Securities, believed  Link Reit would continue to perform well as  interest rates are expected to peak which will make the yield look more attractive.

Other property stocks put in a mixed performance. Swire was up 1.21 per cent to $71.35, Hang Lung Properties rose 0.86 per cent to $11.70 and Cheung Kong (Holdings) added 0.79 per cent to $83 but Sun Hung Kai Properties dropped 0.26 per cent to $76.85 and New World Development fell 0.49 per cent to $10.25.

Henderson Land, which went ex-dividend of 60 cents, slid 0.84 per cent to $35.25.

PCCW was the top blue-chip gainer, adding 2 per cent to $5.10, followed by China Resources Enterprise which rose 1.88 per cent to $13.55.

The H-share Index gained 0.74 per cent  to 5,110.03, driven by  large energy and base metals stocks.

Aluminum Corp of China (Chalco) jumped 6.67 per cent to a  record  $5.60, PetroChina rose 1.65 per cent to $6.15 and coal producer China Shenhua Energy added 1.16 per cent to $8.70. Zijin Mining was up 3.67 per cent to $2.825 as  spot gold  flirted with US$500 per ounce. Sinopec lost 1.82 per cent to $2.70.

Louis Wong, a research director at Phillip Securities,  said  the personal income,  spending and non-farm payroll data due in the US this week  would guide  performance.

Any  negative issues may lead to a potential downside for  stocks which are not  cheap at their current valuation of 15 times earnings.

Mr Wong  also noted that concerns about a slowdown in US economic growth next year may  drag on  equity performances and inflation while  interest rates continued to be a key  concern for the market.

Mr Tang was more upbeat  saying  the market would  continue its year-end rally amid window dressing activities by fund managers.

'Retail stocks will perform better  this week as Hong Kong has reported a better-than-expected third-quarter gross domestic product growth and sentiment is favourable before  the Christmas holiday,' he said.

Newcomer Emer International, an offshore oil drilling rigs maker, gained 20.55 per cent over its offer price to close at 88 cents.



Winning run continues as trade data lifts pace