HONG KONG: Despite the plummeting annual residential sales of the 5th-largest Hong Kong developer (by market value), Hang Lung Property Ltd (HLP), property stocks recorded strong growth in Hong Kong trading after Morgan Stanley recommended investors invest in developer players.

Improved investment sentiment, helped by low borrowing costs among all lenders in Hong Kong, has boosted city housing prices approximately 20 percent this year and, according to UBS, prices may advance 30 percent by the end of this year or early next year.

The Hang Seng property sub-index's 3.5 percent gain yesterday was the biggest among the four industry groups tracked by the Hang Seng Index. The gauge has climbed 67 percent this year, outpacing the benchmark index's 43 percent advance.

"The short-term property price still has about 30 percent upside," said Castor Pang, a strategist at Sun Hung Kai Securities in Hong Kong. "Low interest rates and abundant liquidity are enabling a pretty good outlook."

Henderson Land, a developer controlled by billionaire Lee Shau-kee, advanced 5.8 percent to HK$51.20. Hysan Development Co, a property investor, climbed 10.1 percent to HK$21.20. Morgan Stanley raised its ratings on the two stocks to "overweight" from "equal-weight."

Sino Land rose 5.1 percent to HK$15.82. The brokerage boosted its price target on the stock to HK$19.10 from HK$13.70. Sun Hung Kai Properties Ltd, the city's No 1 developer by market value, climbed 3.6 percent to HK$117.90.

Even slumping HLP rode the day's wave, advancing 6 percent to HK$28.40.

China Daily - Agencies

(HK Edition 08/01/2009 page2)