Hong Kong Office Rents to Plunge

123jump.com Staff
16 Jan, 2009
New York City

In Hong Kong, HSBC was downgraded Goldman Sachs and cut its price target. The second downgrade in a week only confirmed the ongoing weakness in the financial sector that is beginning to spill over in Asia. Separately, Hong Kong office rents are expected to fall in half in the next two years.

[R]6:00AM New York, 6:00PM Hong Kong- Hang Seng falls 7.6% for the week. Morgan Stanley downgrades HSBC.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index rose 0.1% or 12.55 to 13,251.51, falling 7.8% for the week, and the China Enterprises Index of Hong Kong listed mainland shares, gained 1.5% or 104.98 to 7,147.34. In Shanghai trading CSI 300 Index increased 1.8% or 35.34 to 1,990.21.

Daly turnover on main-board declined to HK$47.1 billion from HK$49.4 billion yesterday.

Agricultural Bank of China Becomes a Shareholding Company

Xinhua News Agency reported today that the Agricultural Bank of China was converted to a shareholding company today, last of four largest banks in China to complete its restructuring.

The new bank was given its business registration license yesterday.

Former ABC President Xiang Junbo was appointed chairman of board of directors, and former ABC Vice-President Zhang Yun was appointed president of the new bank and vice-chairman of board of directors.

The Central Huijin Investment Co. and the Ministry of Finance each held 50% equity in the new bank.

Hong Kong Prime Office Rents to Fall 60%

CLSA Asia-Pacific Markets reported in a research note that Hong Kong''s prime office rents might decline 60% through 2010 as banks are likely to lower employees and close offices.

The brokerage forecasts that unemployment rate may rise to 7% in 2009.

Prime office rents in the Central and Admiralty districts shed 14% in the fourth from the previous three months from an earlier projection of 2%.

According to the report, rents in Central will fall 38% this year and 33% in 2010. Prime office rents in the rest of Hong Kong are expected to dip 25% and 15% in 2010.

Gainers & Losers

Hong Kong stocks dropped 0.1% following an investor downgrade of HSBC.

HSBC fell 2.7% to HK$64.20 after U.S. brokerage Goldman Sachs downgraded the stocks to “sell” from “neutral” and cut its price target of HK$49.

Realty stock Wharf Holdings declined 2.5% after CLSA downgraded the stock to “underperform” from “buy.”

Other realty stocks fell. New World Development shed 3.6% and Swire Pacific dropped 1.5%.

However Hang Lung Properties rose 3.3% after JP Morgan shored its stake in the developer to 4.98% after purchasing 1.89 million shares.

China Communications Construction plunged 4% after the World Bank blacklisted its unit for eight years over corporate governance issues after implicating it in a major cartel involving local and international firms bidding on a Philippine road project.

Financial stocks rose on shot covering following recent losses. ICBC jumped 3.6%, Bank of China increased 4.6% and Construction Bank of China gained 3.7%.

Kai Yuan Holdings Ltd rose 14.2% after it said it will buy a steel manufacturing and trading venture for HK$5.2 billion.