Tuesday, 28 October 2008
HK shares in biggest drop since '97 as HSBC slides 14pc
Hong Kong shares recorded their biggest one-day fall in more than a decade on Monday with the Hang Seng index shedding 12.7 per cent of its value. The nosedive, led by blue-chip heavyweight HSBC, came as fears of a global recession hammered other Asian stock markets.
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HK shares in biggest drop since '97 as HSBC slides 14pc
Reuters in Hong Kong
27 October 2008
Hong Kong shares recorded their biggest one-day fall in more than a decade on Monday with the Hang Seng index shedding 12.7 per cent of its value. The nosedive, led by blue-chip heavyweight HSBC, came as fears of a global recession hammered other Asian stock markets.
Hang Seng Index closed down 1,602.54 points at 11,015.84, its lowest level since mid-2004 and taking its losses so far this year to 60 per cent. The index lost as much as 15 per cent earlier, its largest one-day decline since 1987.
Europe's largest lender, HSBC shed 14.77 per cent to HK$75.00, its lowest level in seven years and wiping US$20 billion off its market value. The stock plunged 12.5 per cent on Friday after Morgan Stanley slashed its target price to HK$75 on growing signs of trouble in emerging markets.
“There is panic selling in the market,” said Kenny Tang, associate director at Tung Tai Securities. “Investors are still bracing for the bottom.”
The losses came as Japan's Nikkei average fell 6.4 per cent to its lowest in 26 years as the surging yen will further weaken the nation's exports, hurting the economy. Banks tumbled on concerns they would need to lift their capital.
“Banks are chronically under capitalised, which means credit rationing process is still very much likely,” said Tim Rocks, equity strategist with Macquarie Securities, Hong Kong.
Expectations that the US Federal Reserve will further trim its key interest rates this week to more than four-year lows failed to calm investors.
ICBC, the world's largest bank by market value, slid 11.11 per cent after it reported on Friday a slower pace of growth in third-quarter earnings and posted bigger-than-expected impairment losses on subprime mortgage-linked assets.
The China Enterprise Index of top locally listed mainland companies tumbled 14 per cent to 4,990.08, following a drop in the mainland markets.
Energy stocks were among the day's biggest losers on worries slowing growth in the mainland may cut demand for fuel.
PetroChina, fell 15 per cent, while the region's biggest refiner, Sinopec, gave up 16.44 per cent.
Offshore oil specialist CNOOC slid 13 per cent while top coal miner China Shenhua Energy dropped 23.55 per cent.
Mainland property developer Guangzhou R&F Properties tumbled 22.34 per cent. The stock earlier tested a life low of HK$2.30 after a slew of support measures from the government to prop up the ailing sector failed to revive investor confidence. The company had shed more than a fourth of its market value by midday to stand at HK$3.52.
Bourse operator Hong Kong Exchanges & Clearing shrank 13.89 per cent as dwindling turnover weighed on the company's earnings outlook.
“Nobody can tell for sure where the support levels are or where the bottom is,” said Castor Pang, strategist with Sun Hung Kai Financial
“The current bear market trends point to continuous declines in the market as fund managers unload their positions in the face of increased redemptions.”
Aluminum Corp of China, fell 12.5 per cent after the world's No 3 alumina producer said on Sunday its quarterly earnings plunged 92 per cent, lagging forecasts, while its outlook was clouded by high costs and sliding aluminium prices.
Datang International Power slumped 19 per cent after it said on Sunday it expected its earnings to fall about 85 per cent this year on soaring coal costs.
The country's second-largest power producer reported a net loss of 432.9 million yuan for the third quarter ended September, while rival Huaneng Power dropped 14.25 per cent.
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