Hong Kong shares -- 2 (properties reaching fair value; pressure to continue)

At 11:16 am, the Hang Seng index was down 361.75 points at 13,414.97 on turnover of 3.67 bln hkd, while the Hang Seng property sub-index was down 669.26 points at 17,758.70. Eric Yuen, research manager with Dao Heng Securities, said property stocks are nearing reasonable price levels after recent corrections. "But with no sign that the U.S. market will stabilise soon, the Hong Kong market is likely to continue to face pressure. There is no hurry to buy property stocks now," Yuen said. Yuen said New World Development's current price was fair, with Henderson Land close to its fair price, while a price of 70 hkd would be a good buy for Sun Hung Kai Properties. "Cheung Kong is more complicated. Since it holds about a 50 pct stake in Hutchison Whampoa, weak sentiment towards global telecom stocks is likely to hurt not only Hutchison but also Cheung Kong," Yuen said. Yuen said the falls in interest rates will eventually benefit Hong Kong's property stocks. "Dao Heng Securities still expects the U.S. Federal Reserve will cut interest rates by an additional 75 basis points for the rest of the year. The favourable interest rate environment is positive to property evelopers in the medium and long term," Yuen said. Cheung Kong fell 1.50 hkd to 87.50, Sun Hung Kai Properties shed 4.25 to 75.00, Henderson Land lost 2.20 to 41.80 and New World Development was down 0.95 at 11.65.

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