Hong Kong Stocks Drop 4%

Darlington Musarurwa
20 Nov, 2008
New York City

Hong Kong stocks fell on the global economic slowdown worries tracking losses in Japan and Australia. Banks, realty and retail stocks declined on the worries that credit crunch is likely to get worse in the short term. China to increase tax rebates on the light industry.

[R]6:00AM New York, 6:00PM Hong Kong – Hong Kong stocks fell on the global economic slowdown worries tracking losses in Japan and Australia. China to increase tax rebates on the light industry.[/R]

In Hong Kong trading Hang Seng Index fell 4% or 517.24 to 12,298.56, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, dropped 4.6% or 298.22 to 6,190.90. In Shanghai trading CSI 300 Index fell 1.1% or 20.74 to 1,932.43.

Daily turnover on main-board jumped to HK$44.6 billion from HK$38.9 billion yesterday.

China to Increase Tax Rebates on Light Industry

Xinhua News Agency reported today that the State Council said in a statement after an executive meeting presided by Premier Wen Jiabao that China will increase tax rebates for the light industry.

The foreign trade development fund will help companies promote their brands and acquire new businesses on the international market.

Assistance will also be made through the fund to boost exports. China''s exports growth eased to 19.2% in October from 21.5% the previous month.

Financial subsidies will also be offered to rural residents and people in the quake-hit Sichuan province -hit to stimulate domestic demand. Funding will be availed to develop small and medium enterprises, including technical innovations and upgrades in the companies.

HK Warns of Increased Activity Next Week

Hong Kong Exchanges and Clearing and the Securities and Futures Commission cautioned in a statement today that there will be possible increases in trading activities and unusual price movements next week during the rebalancing of the MSCI Barra indices.

The joint statement noted, “The SFC and HKEx are aware of possible increases in trading activities and unusual price movements around the market close during index rebalancing events, period ends and expiration of derivatives contracts.”

China to Reform Oil Pricing Mechanism in 20 Days

Xinhua News Agency reported today that China will reform its oil pricing mechanism in 20 days. The report notes that the new pricing measures are developed to take into account the recent price declines. Prices of refined oil products are currently under government regulation.

Gainers & Losers

Hong Kong stocks dropped on mounting fears of deep global recession. However, realty stocks gained on bargain hunting after marked drops in share prices in the morning session. Cheung Kong Holdings increased 0.5% and Sun Hung Kai Properties advanced 5%.

Telecommunication stocks also rose on speculation that Beijing will issue the 3G licenses before the end of the year. ZTE Corp edged up 7.4%.

China Construction Bank declined 4.3% on fears that the Bank of America will sell its holdings in the lender on deteriorating conditions in the U.S. credit market. ICBC also fell 6.6% and China Life slid 4.6%.