Asia Property Stocks Rise, Countering Drop in Technology Shares

Oct. 24 (Bloomberg) -- Asian property stocks were buoyed this week as Hong Kong developers advanced on speculation China will maintain stimulus spending, while technology-related companies declined.

Cheung Kong Holdings Ltd., Hong Kong’s second-largest developer by market value, added 6 percent. Wesfarmers Ltd., Australia’s No. 2 retailer, gained 8.5 percent on rising sales of food and liquor. China Telecom Corp., the nation’s biggest fixed-line phone carrier, lost 4 percent in Hong Kong as profit disappointed investors, while LG Display Co. dropped 1.6 percent in Seoul after AT&T Inc. sued liquid-crystal-display makers.

The MSCI Asia Pacific Index fell 2.6 percent to 121.62 this week. The gauge has climbed 69 percent from a five-year low on March 9 as better-than-estimated economic and earnings reports increase optimism that the global economy is recovering from the worst slowdown since World War II.

“Investors haven’t forgotten the nightmare we had last year and are quick to sell when they get anxious,” said Kiyoshi Ishigane, a strategist at Mitsubishi UFJ Asset Management Co., which oversees about $56 billion in Tokyo. “Company profits are gradually returning, but we need to discern whether the stock price already reflects the improvement or not.”

China’s Shanghai Composite Index climbed for the third straight week after central bank adviser Fan Gang said the government should maintain its stimulus spending for another year. Australia’s S&P/ASX 200 Index added 0.5 percent as the nation’s central bank signaled more interest-rate increases as the economy improves, and Rio Tinto Group gained 4 percent on rising metal prices.

Stimulus Spending

Japan’s Nikkei 225 Stock Average rose 0.3 percent, with Daiwa House Industry Co., the nation’s top homebuilder, and Nomura Real Estate Holdings Inc. advancing after reporting higher-than-forecast earnings. Hong Kong’s Hang Seng Index gained 3 percent.

The MSCI Asia Pacific Index has advanced 33 percent in 2009, on course for its strongest annual gain since 2003. Australian central bank policy makers said in minutes of their Oct. 6 meeting released this week that a “very expansionary” setting of policy was “no longer necessary, and possibly imprudent.”

“The pace of the economic recovery will continue,” said Gabriel Gondard, Shanghai-based deputy chief investment officer at Fortune SGAM Fund Management Co., which oversees about $7.2 billion. “Investors will look to the upcoming data for clues.”

Hong Kong Developers

Cheung Kong rose 6 percent to HK$105.50. Agile Property Holdings Ltd., a Hong Kong-listed developer of real estate in China, surged 20 percent.

Investment in Chinese real estate is starting to resume and some industries are beginning to utilize previously idled capacity, Fan said in an interview in Toronto. The government’s stimulus is needed to keep these trends intact, he said.

Reports from China this week also showed industrial production and retail sales grew at a faster pace in September. Still, the nation’s economy expanded 8.9 percent in the third quarter, less than the 9 percent expected by economists in a Bloomberg News survey.

“The Chinese data simply met the market’s consensus view and failed to offer any positive surprise,” said Tomohiro Nishida, a dealer in Tokyo at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest banking group.

China Telecom slipped 4 percent to HK$3.65 after its third- quarter net income tumbled 47 percent to 2.98 billion yuan ($436 million), missing the 3.16 billion yuan expected by analysts. China Mobile, the world’s biggest phone carrier by market value, dropped 2.5 percent to HK$76.80 after third-quarter net income rose 2.6 percent to 28.6 billion yuan, compared with the 29 billion yuan anticipated by analysts in a Bloomberg News survey.

Aviation Industry Outlook

Hong Kong’s Cathay Pacific Airways Ltd. fell 4.5 percent to HK$12.74 after Chief Executive Officer Tony Tyler said he was “cautious” about prospects for the aviation industry.

“People in some parts of the world are talking about the green shoots of recovery,” Tyler said in a speech to the Aviation Club in London, according to an e-mailed press release distributed by Cathay. “We’re not seeing much of that kind of plant life ourselves”

LG Display Co. dropped 1.6 percent to 31,350 won in Seoul, while Samsung Electronics Co. retreated 0.1 percent to 745,000 won and Taiwan’s AU Optronics Corp. slid 2.6 percent to NT$31.55. AT&T, the biggest U.S. phone carrier, filed a complaint in federal court, claiming the companies were among those that “formed an international cartel illegally to restrict competition” in the LCD market in the U.S.

Supermarket Redesign

Wesfarmers jumped 8.5 percent to A$28.26 in Sydney. First- quarter food and liquor sales rose 7.3 percent in the three months through Sept. 27 as it attracted customers to redesigned fresh-produce sections at its Coles supermarkets, the company said.

Challenger Financial Services Group Ltd. climbed 2.7 percent to AS$3.83 as assets under management jumped after sales of annuities and related products more than doubled in the third quarter, and assets under administration and advice rose 50 percent.

Rio Tinto advanced 4 percent to A$67.50 as a measure of metals traded in London rose 5.7 percent in the week. BHP Billiton Ltd., the world’s largest mining company, added 2.6 percent to A$40.20.

In Tokyo, Daiwa House rose 7.8 percent to 1,004 yen, while Nomura Real Estate gained 4.9 percent to 1,591 yen.