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HK stocks slump despite regulators' efforts

(China Daily)
Updated: 2008-10-07 09:35

Hong Kong shares dropped 5 percent yesterday to close below 17000 points for the first time in more than two years, as China stocks sank despite fresh attempts by regulators to prop up the mainland market.

The decline gathered force in the afternoon session as investors were on their guard ahead of Today's holiday in Hong Kong.

"There are no rules in this market, just a whole lot of uncertainty, which makes it difficult to predict where the decline will stop," said Howard Gorges, vice-chairman with South China Brokerages.

Energy shares fell as oil prices tumbled nearly 4 percent amid a rout across the spectrum of commodities amid worries that a growing credit crisis would fail to stave off a sharper decline in oil demand.

Asia's largest oil and gas producer, PetroChina, slid 6.7 percent while offshore oil specialist CNOOC dropped 9 percent to a 14-month closing low of HK$7.58 ($0.98).

The benchmark Hang Seng Index ended down 878.64 points at 16803.76, its lowest closing level since July 2006.

The Shanghai Composite Index dropped 5.2 percent yesterday despite efforts by Chinese regulators to support the market, including the imminent launch of margin trading and short selling on a trial basis.

"Hong Kong outperformed other major markets last week, so we are playing a little catch-up now," said Alex Wong, director with Ample Finance Group.

The blue chip Hang Seng Index fell 5.4 percent last week as compared with a 7.2 percent drop on the MSCI Asia Pacific Index of ex-Japan stocks, while the Dow Jones Industrial Average slid 7.3 percent in the same period.

"Investors were disappointed to see China markets lower after the long holiday, but it's no surprise considering how much global markets have corrected in the meantime."

The China Enterprises Index of top locally listed mainland firms dropped 6.6 percent to 8416.90.

Mainland banks and property stocks tanked as analysts warned of cooling growth amid a global slowdown.

Top lender ICBC tumbled 5.3 percent while second largest lender China Construction Bank skidded 7.3 percent. China Overseas Land Investment gave up part of last week's rally on growth-favorable policies to slump 11.8 percent.

Resources stocks skidded, in line with falling prices of commodities. Gold miner Zijin Mining slumped 13.3 percent while China Coal Energy plummeted 12.9 percent.

Mainland's largest shipping conglomerate China Cosco plunged 12.1 percent amid growing concern over slacking demand for commodities.