Hong Kong stocks close lower on fall of property sector

HONG KONG, Feb. 3 (Chinese media) -- Hong Kong stocks dipped 84.6 points, or 0.66

percent, to close at 12,776.89 on Tuesday, on the plunge of property companies.

The property sub-index of the benchmark Hang Seng Index dived 899.53

points, or 5.34 percent, after a big increase in negative-equity mortgages

raised concerns that the already weak property market will further decrease.

The downturn of the property plays led the Hang Seng index to surrender its

early gains and close lower.

Turnover shrank to 35.26 billion HK dollars (4.55 billion U.S. dollars)

from 35.69 billion HK dollars on Monday.

Traders said they expected the index to fluctuate between 12,000 and 13,600

most of February on caution ahead of earnings season.

"There is no rush to jump into the market, as there are too many

uncertainties over the U.S. economic outlook," said Jackson Wong, investment

manager at Tanrich Securities.

Property companies underperformed the broader market after the Hong Kong

Monetary Authority said the number of residential mortgages in negative equity

rose threefold to 10,949 at the end of December from 2,568 at the end of

September.

The Land Registry also said property transactions slumped 66.1 percent in

January from a year earlier to 5,759, and the total value of property

transactions in the month was 18.7 billion HK dollars, down 72.4 percent from

January 2008.

Citigroup said the sharp increase in Hong Kong's negative- equity mortgages

in the fourth quarter suggested the city's property market deteriorated faster

than originally expected.

Sun Hung Kai fell 4.9 percent to 64.65 HK dollars and Cheung Kong ended

down 6.1 percent at 66.20 HK dollars. Hang Lung Properties was the biggest

blue-chip decliner, tumbling 7.2 percent to 16.32 HK dollars.

But telecommunications stock PCCW bucked the downtrend to rise sharply on

speculative demand ahead of a shareholder vote Wednesday on a plan by its major

shareholders to take it private.

PCCW surged 7.8 percent to 4.17 HK dollars when it resumed trading Tuesday

afternoon.

The financial sector is among the few sectors that ended on thepositive

territory on Tuesday. Bank of East Asia rose 3.3 percent to 15.6 HK dollars,

following news that conglomerate Guoco Group raised its stake in the bank to

5.02 percent from 4.97 percent for12.2 million HK dollars late last month. (One

U.S. dollar = 7.7465Hong Kong dollars)