Hong Kong shares rise after Cosco bid for Orient Overseas

Hong Kong shares edged slightly higher on Monday on the back of Wanda Group’s announcement that it would sell most of its hotel and tourism assets and Cosco Shipping Holdings’ bid to buy Orient Overseas International (OOIL).

The Hang Seng Index closed 0.63 per cent higher at 25,500.06 points. The gain in the benchmark index represented a partial recovery from last week’s decline, which was the worst in four months.

Among the top gainers were Wanda Hotel Development and OOIL. Wanda Hotel Development closed 46.6 per cent higher at 85 HK cents per share after briefly reaching a two-year high at HK$1.48 per share.

This came after parent Wanda Group – chaired by China’s wealthiest man, Wang Jianlin – announced it would sell off most of its hotel and tourism portfolio to Sunac China for US$9.3 billion. Hong Kong-listed Sunac’s shares were suspended before Monday’s announcement.

OOIL, the logistics firm owned by the family of former Hong Kong chief executive Tung Chee-hwa, gained 20 per cent to HK$72 per share after Cosco said it had offered HK$49.23 billion (US$6.3 billion) to buy OOIL.

Cosco is offering HK$78.67 for each OOIL share, according to filings by the companies with the Hong Kong and Shanghai stock exchanges on Sunday.

“OOIL’s acquisition by Cosco Shipping signals reforms in China’s state-owned enterprises are still ongoing,” said Stanley Chan, the director of research at Emperor Securities. “The global shipping industry has been facing strong headwinds and now will be dominated by a few strong players, helping their management of costs and shipbuilding plans.”