HK Stocks Fall 19% in the Quarter

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

China markets recovered from earlier losses in the day and managed to close higher. The HKMA added liquidity to the system and issued revised guidelines for collateral requirements from Monday. Banks closed higher in trading. Shipping companies fell as freight index declined.

[R]6:00AM New York, 6:00PM Hong Kong – Stocks in HK and Shanghai rebounded in today’s session. In the third quarter HK stocks fell 18.5%.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index rose 0.76% or 135.53 to 18,061.21, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, gained 1.28% or 115.05 to 9,070.31. In Shanghai trading CSI 300 Index increased 0.91% or 20.12 to 2,243.66.

Daily turnover on main-board was HK$71.8 billion from HK$55 billion yesterday.

HKMA to Provide Liquidity to Licensed Banks

The Hong Kong Monetary Authority announced on its Web site today that will support liquidity assistance on request from licensed banks from Thursday October 2 until March 2009.

Support will be provided through eligible securities, for access by individual licensed banks to liquidity assistance through the Discount Window and will be expanded to include US dollar assets of credit quality acceptable to the authority.

In addition the duration of assistance will be extended from overnight money to three-month maturities depending on the bank's individual request.

However, collateral for borrowing through the Discount Window for the use of the Exchange Fund paper will be hiked from 50% to 100%, meaning the 5% premium for use of the paper above the 50% threshold will be waived.

Also the HKMA will conduct foreign exchange swaps (between the US dollar and the Hong Kong dollar) of various durations with licensed banks.

The monetary authorities noted that HKMA will lend term money of up to one month “against collateral of credit quality acceptable to the HKMA”.

Observed a HKMA spokesperson: “The existing framework for maintaining banking stability – including the prudential supervision of banks and the arrangements for providing liquidity both at the systemic and institutional levels - have ensured that the banking system of Hong Kong is well prepared for turbulent conditions.”

Gainers & Losers

Stocks in Hong Kong rose marginally on rising expectations that the U.S. House of Representatives will approve an amended $700 billion rescue plan that was vetoed yesterday.

Investors were also covering their short positions, especially before tomorrow’s holiday.

China Mobile rose 2.5% and BYD advanced 7.9% extending gains after Berkshire Hathaway snapped a 10% stake.

Realty stocks dropped as mortgage rate jumped. Sun Hung Kai Properties fell 3.3%, Sino Land declined 4.5%. However, New World Development gained 2.7%.

ICBC gained 1.6%, China Construction Bank soared 2.7% and Wing Lung Bank climbed 6.2% to HK$155.10 as China Merchants Bank acquired the financial institution.

China Merchants declined 2.8%.

Utility companies also gained. Hong Kong Electric jumped 4.4% and CLP Holdings increased 4.1%.

Shipping lines fell on worries global demand for raw material will decline. China shed 3.2% and China Shipping Container tumbled 7.1%.

Hang Fung Gold Technology dipped 60% but was suspended in the afternoon following the death of its chairman.