Shares of Sun Hung Kai Properties (SHKP) went against the upward trend of the Hang Seng Index (HSI) Friday on the back of the face-off between the company's chairman, Walter Kwok, and his two brothers.

Clouded by the family dispute, shares of SHKP received mounting short-sell pressure, which dipped 1.69 percent, or HK$2.30, settling at HK$133.80.

The simmering relationship between Walter and his younger brothers, Thomas and Raymond Kwok - both vice chairmen and managing directors of SHKP - surfaced Thursday, when Walter Kwok petitioned the High Court to stop the board from permanently removing him as chairman.

SHKP issued an official statement after the board meeting, saying the company is seeking legal advice. The company did not make any further comment on the issue Friday.

Henderson Land Development Chairman Lee Shau Kee said Friday that he was very upset by the incident.

"It will be very miserable if the long-established foundation of SHKP is undermined by the dispute," he said. "I hope that they (the Kwok brothers) can peacefully resolve the problem without hurting their mother, Kwong Siu-hing."

Lee said he would not further comment on the incident because the case is in legal proceeding.

Standard & Poor's Ratings Services said the interim injunction won't have immediate impact on the company's rating, or its outstanding debt issue.

"We don't expect the latest court action will have impact on the company's strategy, operation or financials," said Ang Yiying, an analyst at Standard & Poor's Ratings Services.

But Ang noted that the rating could be under pressure if the situation results in a change of management or shareholding structure that leads to a shift in the company's growth strategy.

Karl Thomson Securities Chief Portfolio Strategist Patrick Shum said the management scuffle might pose a physiological risk to shareholders in the short run, but it is unlikely to affect the company's fundamentals.

"With the size of the company, its operations won't be hindered by the dispute."

But Shum advises that investors keep a close eye on the company's property-sale strategy to determine whether business will be affected by any management reshuffle.

Raymond Kwok has been reportedly at odds with his brothers since last May on the issues of property leasing, land acquisitions and board appointments.

Kwok is still suspended as the company's chairman. His duty was temporarily handed over to Kwong Siu-hing.

(HK Edition 05/17/2008 page2)