Shanghai, Hong Kong Drop 5%

123jump.com Staff
06 Oct, 2008
New York City

Hong Kong and China stocks fell as bank crisis extends to Europe from the U.S. Germany was forced to bailout second largest real estate lender. stocks in China fell on the worries that exports from the region will fall. Hong Kong and Shanghai fell 5%. Casino and shipping stocks plunge.

[R]6:00AM New York, 6:00PM Hong Kong – Hong Kong and China stocks plunge as credit market crisis spread from the U.S. to Europe. Casino and shipping stocks plunged.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index declined 4.97% or 878.64 to 16,803.76, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, plunged 6.62% or 596.37 to 8,416.90. In Shanghai trading CSI 300 Index tumbled 5.12% or 114.96 to 2,128.70.

Hong Kong will be closed tomorrow for the Chung Yeung festival holiday and will reopen on Wednesday on October 8.

China Financial Stocks Healthy

Xinhua News Agency reported on its Web site today that Chinese Premier Wen Jiabao said in a speech in Nanning in southwest China yesterday that China''s financial system in healthy because it has increased its strength, risk-resisting ability and profitability despite the global financial crisis.

""It is the biggest contribution to the world when a big country with a population of 1.3 billion is able to maintain a lasting, smooth and fast economic development,"" explained Wen.

Germany Injects 50 billion euro Hypo Real Estate

The German government, the central bank Bundesbank and market regulators have agreed with the financial services sector for a 50-billion-euro bailout package for Hypo Real Estate.

The government also added that the initial contribution of 26 billion euros to Hypo will remain unchanged, notwithstanding the increase in the package''s total value to 50 billion euros.

BNP Paribas Acquires Fortis Assets in Belgium and Luxembourg

French bank BNP Paribas reported on its Web site today that it will purchase Fortis'' operations in both Belgium and Luxembourg, including the international banking franchises for a consideration of 14.5 billion euros.

BNP Paribas will purchase from the Belgian State 75% of Fortis Bank SA/NV and 100% of Fortis Insurance Belgium, and acquire 16% of Fortis Banque Luxembourg from the Luxembourg State, increasing its controlling interest in Fortis Banque Luxembourg to 67%.

For the banking business in Belgium and Luxembourg, the lender will pay 9 billion euros in approximately 132.6 million newly-issued BNP Paribas shares, while Fortis insurance will be acquired for a cash consideration of 5.5 billion euros.

Belgium and Luxembourg own 11.6% and 1.1% equity respectively, with the former state appointing two board members to BNP Paribas SA.

BNP Pariba''s portfolio now include 1,458 branches located in Belgium, Luxembourg, the Fintro branch network in Belgium, and investment management activities that include former ABN AMRO Asset Management.

Fortis'' units in Belgium and Luxembourg have 3 million and 280,000 retail clients respectively.

Gainers & Losers

Stocks in Hong Kong fell on market jitters that were occasioned by the continued deterioration in the financial markets, following the 50 billion euro rescue of Hypo Real Estate by the German government and the purchase of Fortis'' assets in Belgium and Luxembourg by BNP Paribas SA.

Commodity and energy stocks fell as oil and metal prices dropped on concern that demand of raw materials will tumble.

PetroChina lost 6.7% and CNOOC plunged 9%. Zijin Mining slumped 13.3% and China Coal Energy dropped 12.9%.

Financial stocks also slipped. ICBC plummeted 5.3%, China Construction Bank shed 7.3% and China Overseas Land Investment slid 11.8%.

China Cosco climbed down 12.1%.

Airliner Cathay Pacific slipped 7.2% on the anticipated fall of air travel from its premium customers.

Lenovo fell 4.1% after Merrill Lynch downgraded the company to ""neutral"" from ""buy"".

Galaxy Entertainment declined 10.5% after Beijing limited Guangdong residents to only one visit to Macau every three months from once every two months effective from October 1.

Rival Melco International Holdings also plunged 9.3%.