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Hong Kong stocks pare gains as Developers fall

Hong Kong - Hong Kong stocks almost erased an earlier advance as property developers slumped, countering a rally by energy companies after OPEC agreed to a preliminary deal that will cut oil output.

The Hang Seng Index climbed 0.1% as of 08:31, after gaining as much as 0.9%. Cnooc and China Petroleum & Chemical advanced at least 4%, while China Oilfield Services jumped the most since February, after US crude held above $47 a barrel.

A gauge of real estate companies dropped 0.8%, led by Sino Land Hsin Chong plunged by a record as shares resumed trading after Anonymous Analytics rated it a "strong sell." The Shanghai Composite Index advanced 0.4%.

The Organization of Petroleum Exporting Countries agreed to trim production following an informal meeting in Algiers. Concern over a global glut has weighed on crude prices for at least the past two years.

The Hang Seng Index has gained 14% this quarter, Asia’s biggest advance, as mainland inflows swelled via an exchange link with Shanghai and traders scaled back bets for higher US borrowing costs. Mainland markets will be shut next week for holidays.

"In the short term oil prices will support energy stocks," said Sam Chi Yung, senior strategist at South China Financial in Hong Kong. "Since China holidays are coming up and the stock connect is closed, Hong Kong market’s turnover will be slow in general."

Mainland inflows

The Hang Seng Index rose to 23 638.61, while the Hang Seng China Enterprises Index climbed 0.5%, extending its quarterly gain to 12%. The Shanghai Composite Index has advanced just 2.4% in the period. Trading volume on the CSI 300 Index was 38 percent below the 30-day average for this time of day.

Net buying of Hong Kong shares through a link with Shanghai totaled 58.7 billion yuan this month, compared with purchases of just 1.75 billion yuan in the other direction. That’s helped narrow a valuation gap between dual-listed shares in Hong Kong and Chinese exchanges to near the smallest since 2014. The connect is closed from today until October 11.

Annual loss

The Shanghai Composite will end the year at 3 075, according to the median forecast in a Bloomberg poll of 10 strategists and fund managers. That implies a 13% drop over the 12-month period, the steepest in five years, and a gain of 2.9% from Wednesday’s close.

Fading prospects for monetary easing, a slowing economy and the risk of higher US borrowing costs spurring yuan weakness were among factors weighing on the nation’s shares, the survey showed.

Cnooc and China Petroleum & Chemical, better known as Sinopec, both headed for their biggest gains since mid-April. OPEC said its members reached a preliminary agreement to cut output to a range of 32.5 million to 33 million barrels per day, though the group won’t decide on targets for each country until a November meeting in Vienna.

The Hang Seng Properties Index retreated for a second day this week. The gauge has jumped 17% this quarter, the largest advance among four industry groups. Sino Land headed for its biggest loss in two weeks, while China Resources Land slid 1.8%.

Hsin Chong fell 32%, after sinking as much as 57% earlier. The company said Anonymous Analytics adopted an “extremely negative” assessment of prospects.

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