By Hanny Wan
January 23, 2008
Jan. 23 (Bloomberg) -- Hong Kong's stocks rose the most in a decade, led by HSBC Holdings Plc, after the city followed the U.S. Federal Reserve's surprise interest-rate cut by lowering borrowing costs.
Sun Hung Kai Properties Ltd., Hong Kong's largest developer, and Hang Lung Properties Ltd. surged. China Unicom Ltd. jumped the most since 2000 after Goldman, Sachs & Co. raised its rating to ``buy.''
The city's monetary policy tracks the Fed's because its currency is pegged to the U.S. dollar. Lower borrowing costs boost demand for real estate.
``Now that we have a further rate cut, developers are looking even more attractive,'' said Nancy Lee, who helps manage $200 million at Taifook Asset Management Ltd. in Hong Kong.
The Hang Seng Index added 2,332.54, or 11 percent, to close at 24,090.17. That was its biggest jump since Feb. 2, 1998. The gauge's 14 percent plunge in the past two sessions was the steepest since the period ended Oct. 28, 1997.
The Fed cut its benchmark rate to 3.5 percent in its first emergency reduction since 2001 to ward off a recession in the U.S. The Hong Kong Monetary Authority today reduced its base rate for overnight lending to 5 percent from 5.75 percent.
The Hang Seng China Enterprises Index, which tracks ``H shares'' of Chinese companies, climbed 11 percent to 13,279.53, its biggest advance since Sept. 7, 1998.
``For those who've got cash in their hands, they're taking advantage of the recent slump to accumulate on weakness,'' Lee said. ``Investors are keen to buy asset plays.''
Source: Bloomberg
Hong Kong Stocks Surge Most in a Decade; HSBC, Hang Lung Jump
