HK Stocks Fall on Renewed Economy Concerns

123jump.com Staff
08 Jul, 2008
New York City

Hong Kong''s stock market plummeted as U.S. credit concerns and regional declines affected investor sentiment. Most Asian markets also lost ground Tuesday. Aluminum Corp. lost 5.6% on reports that it may see lower output at two of its mainland plants. China Petroleum & Chemical Corp. fell 2.7% despite lower crude prices, while CNOOC lost 3.4%. In export-related stocks, Foxconn International, handset manufacture, was downgraded and shed 10.3%.

[R]6:00AM New York, 6:00PM Hong Kong - Global woes affect Hang Seng[/R]

Stocks in Hong Kong plummeted on renewed worries of credit related losses after Lehman Brothers forecasted the US mortgage lenders Fannie Mae and Freddie Mac will need to raise US$75 billion to avoid further writedowns if the new FAS 140 rule is effected.

Market Sentiment

In Hong Kong trading Hang Seng Index fell 3.16% or 692.25 at 21,220.81, and the China Enterprises Index of Hong Kong listed mainland stocks, or H shares, dropped 3.57% or 418.63 at 11,293.32. In Shanghai trading CSI 300 Index rose 0.66% or 19.08 at 2,901.84.

Daily turnover on main-board was HK$63.7 billion compared with HK$59.9 billion yesterday.

China Textile and Garment Export Drop in September-May period

Xinhua News Agency reported on its Web site today that according to a report released by China Customs over the weekend the growth rate of China’s textile and garment exports slumped 3.7 percentage points from September last year to May.

Market watchers attributed the decline to rising labor and production costs, global economic slowdown, export rebate tax cut and the faster appreciation of the yuan.

The report noted that in the first five months textile and garment exports rose 15.4% from a year ago to US$66.2 billion, but the growth rate was down 0.2 percentage points over the comparable period a year ago.

China National Garment Association said the mounting pressures on domestic exporters had naturally led to a transfer of production from the eastern region to the central and western regions where labor and production costs are lower.

Resultantly, textile and garment output in the central region jumped 30% during the first five months.

China National Gold Group Corp. Profit Rises 56.97%

The Shanghai Securities News reported today that China National Golf Group Corp’s profit increased 56.97% year-on-year in the January to May period on increased gold output and rising gold prices.

Output at the company rose 49.69% in the first five months year on year.

CNGGC said yesterday it has discovered a “new vein” with an estimated 15 tonnes of gold at its mines in southwestern Guangxi Zhuang Autonomous Region.

Gainers & Losers

Financial stocks fell on news that US mortgage lenders Fannie Mae and Freddie Mac will need to raise US$75 billion if a new accounting rule is implemented.

HSBC Holdings fell 2.4%. ICBC slipped 3.2%, China Construction Bank climbed down 2.6% and Bank of Communications shed 3.3%.

Also the Bank of East Asia tumbled 5.9% after Morgan Stanley cut its rating on the stock to “underweight” from “equal-weight” on reduced earnings expectations.

Hong Kong Exchanges & Clearing Ltd plunged 5.9%.

Foxconn International Holdings slumped 10.3% to a three-year low after CLSA slashed its rating on the stock to “sell” from “underperform”, citing waning demand of handsets.

Commodity stocks also fell as crude oil declined 2.7% to $141.37 a barrel on slowing demand. CNOOC dropped 3.4% and PetroChina plummeted 3.7%.

Aluminium Corp of China declined 5.6% after it reported yesterday that two aluminium smelters in Shanxi province power supplies had been compromised.