Hong Kong Developers Advance Ahead of City's Budget Speech

(Bloomberg) -- Hong Kong property stocks extended gains ahead of the city’s annual budget speech on Wednesday, as some analysts anticipated announcements that would benefit developers.

Property companies were the biggest gainers on the Hang Seng Index, with Sun Hung Kai Properties Ltd. climbing almost 3 percent and Henderson Land Development Co. advancing 1.4 percent, both on volume that was more than triple their three-month average. New World Development Co. rose 0.9 percent after gaining as much as 1.7 percent. Hong Kong’s benchmark index retreated 0.8 percent.

“People have gotten slightly more optimistic on sales -- prices have been ticking up and we saw 22 bidders for a redevelopment project in Central,” said David Millhouse, China head at Forsyth Barr Asia Ltd. There is speculation land supply unveiled in Wednesday’s budget will be less than expected, which “would be positive for the major developers, who have strong project pipelines.”

The budget speech will be delivered by Financial Secretary Paul Chan, who took the position last month after John Tsang resigned to run for the position of Hong Kong’s next chief executive. The government may reveal plans to offer 25 sites this year for the construction of about 19,000 private residential units, the Hong Kong Economic Times reported on Tuesday, without saying where it got the information.

In last year’s speech, Tsang repeated the government’s commitment to increase housing supply after prices soared to make the city the world’s most expensive place to own a home. The government wants to provide 280,000 public housing units over the next 10 years, he said at the time.

Shares of Hong Kong developers had been recovering this year as the city’s property prices have edged closer to a record high, despite curbs by the authorities to cool the market. The residential site in Central referred to by Millhouse drew the highest number of bids ever for a single redevelopment site, the Standard reported on Tuesday, saying it attracted 22 tenders including from Sun Hung Kai and Cheung Kong Property Holdings Ltd.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net.

To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Sree Vidya Bhaktavatsalam, Robin Ganguly