Stocks decline for second day; Chalco, Zijin drop

Hong Kong stocks fell for a second day, led by commodity producers on lower metal prices, while companies relying on exports declined after the city's government said sales overseas were "very weak".

The Hang Seng Index fell 0.8 percent to close at 22,324.96. More than five stocks dropped on the benchmark measure for each that rose. December Hang Seng Index futures declined 0.4 percent to 22,341.

The Hang Seng China Enterprises Index, which tracks so-called H-shares of mainland companies listed in Hong Kong, also fell 0.8 percent, to 13,358.30. Aluminum Corp., known as Chalco, dropped 2.1 percent to HK$8.79, the sharpest decline on the Hang Seng Index.

Aluminum Corp of China Ltd, the country's largest producer of the metal, dropped 2.1 percent. Zijin Mining Group Co, China's largest gold producer, plunged 5.1 percent. China Gas Holdings Ltd, a supplier of the fuel to homes and businesses on the mainland, jumped 6.4 percent to HK$3.64, its highest close since December 6, 2007.

Pacific Insurance said to sell $3.3 billion of shares

China Pacific Insurance (Group) Co and the country's pension fund plan to raise as much as HK$25.93 billion ($3.3 billion) in a Hong Kong share sale that may be the city's second-biggest this year, four people familiar with the plan said.

The nation's third-largest insurer and the National Social Security Fund are offering 861.3 million shares at HK$26.80 to HK$30.10 apiece, said the people, declining to be identified before an official announcement. The sale is made up of 90.9 percent new shares from the company, with the rest offered by the fund.

The offer values China Pacific at a discount of at least 27 percent to its two bigger competitors, based on estimates of embedded value by banks involved in the sale, two of the people said. The insurer, part-owned by Carlyle Group, will replenish capital after the company and rivals accelerated sales of lower-margin policies to boost market share.

The 861.3 million shares being sold represent a 10.2 percent stake in the company. The share sale values China Pacific at 1.7 times to 1.9 times next year's embedded value as estimated by banks involved in the sale, said two people familiar with the sale.

HK forex reserves at $256.3b at end-November

Hong Kong's official foreign currency reserve assets stood at $256.3 billion at the end of November, the Hong Kong Monetary Authority said on Monday, up 6.75 percent from $240.1 billion at the end of October.

Hong Kong, whose currency is linked to the US dollar, ranks as the world's seventh-largest holder of foreign currency reserves after the mainland, Japan, Russia, Taiwan, India and Korea.

Chian Daily/Agencies

(HK Edition 12/08/2009 page4)