Developers lead Hong Kong push

IF YOU are feeling cheesed off with London on Thursday and have a spare half-a-million quid lying around, why not consider the merits of

The Chinese territory's beleaguered government says it will consider extending residency to foreigners who plough HK$6.5m (£500,000) into local property, shares and bonds for at least seven years.

News of the amended scheme, unveiled during a national holiday that the market was closed for on Wednesday, was one factor behind a rise in listed property stocks when traders got back to business on Thursday.

Wall Street's overnight jump undoubtedly acted as an additional, important tonic. Pepped up by the reasons-to-buy, the 33-member lead benchmark climbed 240.34 points or 2.1% to 11,470.21.

Developers led the push higher, which came even as some banks have started to warn that recent rises have been overdone. 'The market should not go up in a straight line,' Citigroup Smith Barney intoned last week.

But Cheung Kong, the property play controlled by Li Ka-shing, Asia's richest man, climbed HK$2.50 or 4% to HK$63.75; Henderson Land Development rose HK$1.30 or 4% to HK$33.80 and Hang Lung Properties strengthened 30 cents or 3% to HK$10.10.

Property prices - both residential and commercial - have been under the cosh since the territory's asset bubble burst spectacularly in 1998, during the middle of a regional financial crisis.

Since then they have slumped by up to 60% despite a raft of increasingly desperate measures from Chief Executive Tung Chee-hwa's government to get them back up or, at the very least, stabilise.

The enhanced residency scheme was one more effort in that protracted drive. The other, a possible extension of the lockdown on land sales, could soon be another.

Thursday's buying mood extended across the board, with banks, airlines, exporters, retailers and hoteliers all doing well. A fresh, positive reading on the local purchasing managers index - 54.8, a three-year high - buttressed hopes of an economic upturn.

Cathay Pacific Airways was 30 cents or 1.5% higher at HK$13.30; Esprit, the clothing retail group, spurted 80 cents or 3.4% to HK$24.35; and global lender HSBC put on HK$1.50 or 1.4% to HK$105.50.

In Japan the bulls also had the upper hand. Banks were again in the vanguard amid expectations that they were putting their own corporate houses in order as the economy was picking up speed.

Mizuho Financial breached the 300,000-yen barrier for the first time, adding 17,000 yen or 5.9% at 307,000. The share has risen more than fivefold since it bottomed out in late April.

UFJ gained 31,000 yen or 5.3% to 520,000, while Sumitomo Mitsui Financial traded at 523,000 yen, better by 23,000 yen or 4.6%

The Nikkei 225 rose 232.29 points to close at 10.593.53.

With signs of further yenbashing from Tokyo, carmakers enjoyed a reprieve. Honda added 10 yen or 0.2% to 4420.

Australia's Peter Lehmann Wines picked up a cent to A$4.03 in Sydney as the company's independent directors backed a bid worth A$3.85 a share from Switzerland's Hess Group. A $4 pitch from Britain's Allied Domecq was spurned.

The All Ordinaries index closed 38.7 points (1.22%) up at 3,203.4, aided by a rise of 25 cents or 2% in Rupert Murdoch's News Corporation to A$12.05.