While property stocks in nearby mainland China performed very well over the day’s trading on January 9th and in particular the morning sessions, the reverse was true for property stocks in Hong Kong and really for the stock exchange as a whole. The stock exchange overall was down 1.39% (384.99 points) largely because of fears from investors that the high flying property stocks might be nearing the end of their bullish ways.
This was mostly because of the actions of Hong Kong property giant Cheung Kong which happens to be the major company under the banner of property tycoon Li Ka-shing. Rumours of an upcoming placement from the institutional shareholders were proven true in the trading session, as shareholders began selling off almost HKD 5 billion worth of stocks in the company.
The sell off, combined with fears that the massive gains made by the company in recent years are at an end, were the main reasons for the fall of stock value in Cheung Kong. The company ended off the trading day down 3% with a share value of HKD 141.5.
Other property companies lost on the day as well. New World lost 2.2% to end the day with a share value of HKD 28.85. Sino Land saw their stock value plummet 4% to end the day off at a share price of HKD 28.2. SHKP lost 3.5% to end off at HKD 166.7. It was not a good day for property companies on the blue chip Hang Seng Index and their severe downward movement brought many of the other sectors along.
According to brokerage firm Core Pacific-Yamaichi, this is just the start of what is expected to be a massive downturn in the overall value of the index, which they expect to lose at least another 2,000 points over the course of 2008. The brokerage firm expects that the market will enter consolidation mode over the whole of the 2008 year because factors like the worldwide loss of credit, the upcoming recession in the US economy and greatly increasing inflation have made it impossible for the index to continue the five year rise it has been on.
