HK Property Developers Fight Stamp Duty Hike, Real Estate and Mining Shares Rise

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Prices were mixed in Asia Friday. China's Shanghai Composite Index climbed 1.1% and Japan's Nikkei 225 Index advanced 1.3%. In Hong Kong, the Hang Seng dipped 0.1%.Real Estate companies made the biggest gains in Hong Kong today, with stocks rising amid outcries by big developers against the proposed hike in stamp duty fees on luxury property purchases worth more than HK$20 million ($2.57 million).

Analysts have been warning that property prices in the territory could fall for ages, but so far they just keep going up. With prices up about 40% in the second half of 2009, those with big investments in the sector are reaping the financial rewards from their shrewd investments; Li Ka-shing, Chiarman of Cheung Kong has this year been named Hong Kong's richest person with an estimated $21.3 billion to his name according to Forbes, which also said that his wealth increased by $5 billion in the past year alone.

But this week Justin Chiu, Cheung Kong's executive director, warned that soon we may really be in for a correction. "There should be a correction at some point," he told Bloomberg, adding, "Buyers must not expect the same pace of growth in prices in 2010." Some say that stratospheric Hong Kong prices are still far below the values seen at the top of the market in 1997 and so now seem within reach to those who've been around for a while. But events like the 2003 SARS outbreak forced prices to fall suddenly, and those who didn't flee or fall ill, found great buying opportunities.

Developers are also clamoring for the government to release more land for development, which would surely expand business for real estate companies. The government is considering the move, in the hopes that increased availability will cool the market. In a country where a 1,000-square-foot apartment is considered a luxury and buildings are sky-high, many residences can be carved out of a small plot of land.

In today's trading, Henderson Land surged 2.6%, Sino Land racked up a 1.4% gain and Hang Lung rose 1.2%. Li Ka-shing's Cheung Kong advanced 1.6%.

Financial companies were the biggest drag on the Hang Seng today with HSBC losing 0.7%, Industrial & Commercial Bank of China slipping 0.4% and Bank of China dipping 0.5%.

China's real estate companies had mixed results today: China Evergrande lost 3.7% and China Vanke gained 1% and both Poly Real Estate and China Merchahnts Property Development rose 0.6%.

China's Changchun Department Jutuan Store surged by its 10% daily limit today, on expectations that sales will explode during the upcoming Chinese New Year festival, when part of the ritual actually includes clearing out old belongings and buying new clothes.

Raw materials companies performed well in China today after prices on the London Metals exchange leaped 4.7% in yesterday's trading. Jiangxi Copper soaring 3.3%, Baoshan Iron & Steel rising 2.4% and gold miner Zijin Mining gaining 1.9%.

In Japan, prices were up today after yesterday's holiday. Taiheiyo Cement, which has operations in Japan, China and the U.S., surged 8%, and Asahi Glass, maker of glass products used in construction and LCD displays, ose 6.9%. Battery maker GS Yuasa Corp surged 9.7%. Not a bad end to a choppy week.


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