Bank queries HK's property-led rise

A HOT property sector in

First to Hong Kong, where the Hang Seng index gained 145.1 points or 1.3% to 11,089.46 with buyers cheered by the overnight rebound in US equities and, once again, a gathering sense that fundamentals in the city are truly on the mend.

Property plays - the bedrock of the local economy - led the push. Cheung Kong, the developer run by tycoon Li Kashing, rose HK$1.25 or 2% to HK$61.50. It has climbed from a low of HK$39.80 in April.

Henderson Land Development gained 65 cents or 2.2% to HK$30.30, Hang Lung Properties was better by 25 cents at HK$9.50, a gain of 2.7%, and Sun Hung Kai Properties jumped an impressive HK$3, or 5.1%, to HK$61.75.

The benchmark was also lifted by strength in retailer Esprit - 20 cents or 0.9% higher at HK$21.95 - in the wake of stellar figures, and advances for banks, bolstered by the US market's improvement. Global lender HSBC put on HK$1 to HK$103.50.

But Smith Barney is warning there could be a setback ahead. 'The market should not go up in a straight line,' its team commented rather acidly.

'A healthy consolidation is likely, given earnings revision momentum has yet to justify higher valuations, more fund-raising and less exciting news flow.'

The silver lining to this process, if it materialises, would be a downswing that would be neither too protracted, nor that severe, their report added.

A firm floor was seen by Smith Barney at between 10,000 and 10,500 points, at most 10% down from current levels.

Also making waves in Hong Kong on Wednesday was yet another feisty newcomer from across the border. Weiqiao Textile, China's largest cotton textile maker, rose 80 cents from its offer price of HK$8.50.

Tokyo recovered from further early setbacks for carmakers and other exporters, bruised by the newly revitalised yen. But the flipside of that same story was the positive spin-off for importers, which pulled the wider market back up.

Nippon Oil, the oil distributor, gained 21 yen or 4.3% to 511. A stronger yen means cheaper import prices for it. Starbucks Coffee Japan, a major importer listed on a separate start-up market, soared 12.2% to 18,440 yen.

But carmakers - which rely heavily on export earnings - were thumped again. Honda backtracked 90 yen, or 1.9%, to 4660 yen, Nissan slid 69 yen or 4.9% to 1203 yen and Toyota dropped 100 yen or 2.9% to 3410.

The Nikkei 225 Average closed 27.19 points higher at 10,502.29, a gain of some 0.3%

In Australia, News Corp, the media conglomerate controlled by Rupert Murdoch, gained 23 cents, or 1.9%, to A$12.65. Traders said the life came from a brighter Wall Street and amid much talk that Murdoch's son, James, was set to take the helm at UK broadcaster BSkyB.

News Corp owns 34% of BSkyB, where chief executive Tony Ball quit on Tuesday. The All Ordinaries index was up 20.7 points, or 0.7%, at 3201.3.