HK property stocks hit by Sars

[Wise Young]

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Asia Watch: HK property stocks hit by Sars
By Justine Lau and Joe Leahy in Hong Kong
Published: April 9 2003 11:12 | Last Updated: April 9 2003 11:12

The fallout from the severe acute respiratory syndrome (Sars) outbreak in Hong Kong has spread to the property sector this week, with shares of the leading developers plunging on fears the problem is undermining rentals and sales.

The stocks' falls were exacerbated on Wednesday after Moody's Investors Service revised downwards the outlook on its credit ratings for several large property companies including Hysan Development, Hongkong Land and Wharf (Holdings).

"There is no sign that Sars is coming under control yet. Retail stores and restaurants are also asking developers to lower their rents," said Ben Kwong, director of KGI Asia in Hong Kong. "There is a combination of bad news weighing on the sector."

On Wednesday, the benchmark Hang Seng Index dropped 1.93 per cent, or 169.81 points, to 8,636.85. The Hang Seng properties sub-index, meanwhile, fell 4.28 per cent, or 431.98 points, to 9112.67.

Wharf (Holdings) plunged 5.9 per cent to HK$12.75 while Hysan lost 3.67 per cent to HK$5.25. Singapore-listed Hongkong Land ended down 2.6 per cent at S$1.12.

Sars, an acute form of pneumonia that has infected 928 people in Hong Kong and killed 25, has dealt a heavy blow to Hong Kong's domestic economy, which was already struggling with high unemployment, four years of deflation and expected tax increases. Retailers claim that since the outbreak of Sars last month, sales have dropped 50 per cent, leading store and restaurant owners to press developers to cut rents to help them survive the downturn.

Developers, however, can ill afford to make further losses. Property prices have declined 65 per cent in Hong Kong since the Asian financial crisis of 1997/1998. Morgan Stanley this week said it expected prices to fall another 15 to 20 per cent over the next two years.

Commenting on its ratings actions, Moody's said it was concerned over the downturn in Hong Kong's office rental market might last longer than expected.

"Short-term pressure in returns from its retail and residential portfolio is also expected given the recent outbreak of Sars in Hong Kong," it said in reference to Hysan, which has a large retail property business.

Even discounting Sars situation, analysts said the property sector, particularly residential sales, would still be under pressure due to a mismatch of supply and demand in the market.

"The expectation of slow months ahead would not help the running problem of a huge overhang of some 26,000 launched but unsold [housing] units in the market," Morgan Stanley analyst Kenny Tse said. "This figure is still high from a historical perspective and roughly equivalent to a year of take-up."

KGI's Mr Kwong said he expected property stocks to fall another 3 to 5 per cent before staging a short-term technical rebound. But in the next one to two years, the sector would continue to under perform the broader market.

"If you look at fundamentals, the sector is not very good. It's not only Sars but the whole economy," said Mr Kwong.

[Wise Young]

SARS Doctors Treated Like Heroes in China

By HELEN LUK
Associated Press Writer

April 9, 2003, 4:00 AM EDT

HONG KONG -- The front-line doctors and nurses battling the outbreak of a deadly flu-like virus in Hong Kong have become heroes here, as police and firefighters were to New Yorkers in the days after Sept. 11.

At the local version of the Academy Awards on Sunday, celebrities paid tribute to the medical workers fighting severe acute respiratory syndrome, or SARS, which has killed 25 people and sickened more than 900 in Hong Kong.

Almost one quarter of the city's SARS cases are medical workers who caught the disease on the job.

"On behalf of Hong Kong's showbiz industry and the public, I salute our medical workers," said host and comedian Eric Tsang at the Hong Kong Film Awards. He thanked the doctors and nurses three times before bowing at the show's start. "We are proud of you."

Tsang said the war in Iraq and the spread of SARS in Hong Kong had made him wonder whether it was appropriate for him to host the awards program.

"But after I saw on television how an infected doctor who had just recovered saying he would go right back into the wards -- I knew that the show must go on," Tsang said.

More than 64,000 people have signed a card being circulated around in e-mails, with a picture of hands holding up a torch to express support and boost the morale of front-line medical workers. Yahoo.com in Hong Kong, which initiated the card, plans to print it and send it to 42 hospitals.

Some here drew comparisons to New York City's heroes of the World Trade Center disaster.

The New York firefighters lost colleagues, yet "all they cared about was saving as many lives as possible, ignoring that they were also in a very dangerous situation," said Kam Bak, a 40-year-old clerk. "Hong Kong's medical workers are the same."

SARS has killed at least 104 people and infected more than 2,600 worldwide.

In Hong Kong, the disease has spread unchecked. Now medical authorities are preparing for as many as 3,000 SARS patients to fill Hong Kong's hospitals should the epidemic spread even more rapidly.

No hospital workers are known to have died, but many of those who have recovered have gone right back to work in the SARS wards.

Ko Mei-lin, a 39-year-old office assistant, said she was moved to tears by televised images of medical workers who had been struck by the illness.

"This disease is so terrifying, but they are still undaunted and continue to take care of patients," Ko said, speaking like many thousands of others here from behind a surgical mask that she hopes will protect her from SARS.

Dr. Gavin Joynt, director of the intensive care unit at hard-hit Prince of Wales Hospital, questioned the hero treatment.

"I don't particularly feel like a hero at all," said Joynt, whose team is treating 20 ICU patients, six of them medical staff. "We are all stressed, but we are doing our job."

The hospital's own chief executive, Dr. Fung Hong, is the latest to be stricken with the disease. He was in stable condition Monday.

Many in Hong Kong appear to have little faith in the government of Chief Executive Tung Chee-hwa, and some analysts say doctors and nurses have filled a void left by Tung's perceived lack of leadership.

"At the moment, people are not pulling together behind the government," said Michael DeGolyer, a political scientist at Hong Kong Baptist University who specializes in gauging public opinion. "People are pulling together with each other and behind the doctors and nurses who have put their lives on the line."