Hong Kong Stocks Plunge 3%; HSBC Drops

123jump.com Staff
20 Jan, 2009
New York City

Hong Kong stocks plunged nearly 3% on the global markets weakness. The plunge in Royal Bank of Scotland renewed fears that HSBC, one of the largest lender in the region may suffer more loan losses. HSBC dropped for the seventh day in a row. HKMA and PBoC entered in a currency swap to add liquidity.

[R]6:00AM New York, 6:00PM Hong Kong - Hong Kong Monetary Authority, Peoples Bank of China sign currency swap arrangements.[/R]

Hong Kong stocks dipped 2.9% as financial stocks plunged following an announcement by Royal Bank of Scotland that its annual loss this year will be £28 billion. HSBC extended losses for the seventh consecutive trading session.

Investors were unnerved by the report from Morgan Stanley that Hong Kong''s economy will contract 3.9% this year.

In Hong Kong trading Hang Seng Index plunged 2.9% or 380.22 to 12,959.77, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, fell 3.3% or 240.27 to 7,005.88. In Shanghai trading CSI 300 Index gained 0.6% or 12.72 to 2,025.19.

Daily turnover on main-board increased to HK$39.6 billion compared with HK$37.9 yesterday.

Peoples Bank of China, HKMA Sign Currency Swaps

Hong Kong Monetary Authority and the Peoples Bank of China today signed currency swap arrangements. The move will allow the two central banks to stabilize the currency trading and release more capital for lending and may lower inter-bank lending rates.

Through the currency swap arrangements short-term liquidity support will be provided to the mainland operations of Hong Kong operations of Mainland banks, if required.

The currency swap agreement has a term of three years, which can be extended upon the agreement of both parties.

According to the HKMA, the new swap arrangement will add liquidity of as much as Rmb200 billion or HK$227 billion.

HK Tourist Arrivals Increase 4.7%

The Hong Kong Tourism Board reported today that the number of arrivals in Hong Kong gained 4.7% to 29.5 million from a year ago.

Visitors from mainland China soared 8.8% to 16.6 million.

However visitors from international markets dropped 3.9% to 4.7 million in the year.

Gainers & Losers

Financial stocks fell after the UK based Royal Bank of Scotland said in a statement that the company may realize an annual loss of £28 billion on exceptional goodwill impairment of £8 billion.

HSBC declined for the seven day in a row, losing 7.7% to HK$57.50, ICBC dipped 4.6% and China Construction Bank declined 3.8%.

CITIC Bank dropped 2.1% after rallying in trading yesterday.

China Mobile gained 1.2 %. Foxconn International Holdings plummeted 7.3% on slowing global demand.

Ping An Insurance fell 1.7% after reporting that insurance premium income rose to Rmb129.1 billion in 2008.