HK Recovers 7.7% Plunge; Shanghai Down 1.7%

123jump.com Staff
18 Sep, 2008
New York City

Stocks in Hong Kong trading plunged 7.7% before recovering in the afternoon after six largest central banks added liquidity in the credit market to tune of $188 billion. Fearful investors sold stocks in banking sector after the U.S. market indexes lost more than 4% in the overnight trading. The Hong Kong benchmark index recovered in the afternoon to close nearly unchanged. But nervousness still persists in the market and Shanghai closed 1.7% lower.

[R]6:00AM New York, 6:00PM Hong Kong – Hong Kong benchmark index plunges 7.7% but recovered after six central banks agreed to pump liquidity of $188 billion.[/R]

Stocks in Hong Kong trading plunged 7.7% before recovering in the afternoon after six largest central banks added liquidity in the credit market to tune of $188 billion. Fearful investors sold stocks in banking sector after the U.S. market indexes lost more than 4% in the overnight trading. The Hong Kong benchmark index recovered in the afternoon to close nearly unchanged. But nervousness still persists in the market and Shanghai closed 1.7% lower.

Market Sentiment

In Hong Kong trading Hang Seng Index fell 0.03% or 4.73 to 17,632.46, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, slipped 0.36% or 31.42 to 8,633.73. In Shanghai trading CSI 300 Index declined 1.72% or 33.14 to 1,895.99.

Daily turnover on main-board was HK$102.2 billion from HK$76.2 billion at mid-day yesterday.

China to Cancel Stamp Tax on Stock Buying

Xinhua News Agency reported that the Central Huijin Investment Co, Ltd., an investment arm of the Chinese government said today it will purchase shares of three biggest Chinese lenders, the Industrial and Commercial Bank of China, the Bank of China and the China Construction Bank in the secondary market. The move may prop prices of the banks that have fallen more than 50% in the last one year of trading.

Central Huijin is mainly oriented to restructure banks plagued with non-performing loans.

Gainers & Losers

Stocks in Hong Kong were flat after sharp losses in the morning session were trimmed by confidence that new liquidity in the credit markets will improve sentiment among banks.

The Hang Seng dipped as much as 7.7% as investors abandoned Chinese financial stocks.

Telecommunication stocks gained. China Mobile edged up 4.3% to HK$73.20, China Unicom gained 10.8% and China Netcom surged 6.8%.

Gold stocks surged after price of gold and silver rose the most since 1979. Zijin Mining spiked 20.7%, Sino Gold soared 27.9% and Zhaojin Mining jumped 31.4 %.

Financial stocks recovered in afternoon trading on the news that central banks will pour an additional $185 million in the world markets to calm the cash squeeze. Industrial & Commercial Bank of China increased 0.3%.

Bank of East Asia declined 6.6% to HK$27.55 before trading was suspended, as global financial turmoil triggered a heavy sell-off in banks listed in Hong Kong.

PCCW plunged 9.6% on caution over the company’s plans to prioritize dividend payouts to new investors over existing minority investors.