HK index slides after 4-day winning streak

Hong Kong stocks fell yesterday, as a four-day gaining streak led investors to pocket recent gains, while global lender HSBC Holdings plc sank further amid deteriorating credit markets.

Telecom stocks saw active trade, with China Netcom hitting all-time highs on talk of a government meeting over the weekend to discuss the industry's long-awaited consolidation.

Hong Kong paced gains in other Asian equity markets in early trade, but eased on the approach of 23500 points.

"We're seeing profit-taking at high levels as investors are hesitant to chase at those levels," said Andrew To, sales director at Tai Fook Securities. "In the near-term, we'll see sideways consolidation."

The benchmark Hang Seng Index closed down 1.6 percent, or 389.18 points, at 23759.25. The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, fell 1.5 percent to 13630.25.

Mainboard turnover was HK$78.1 billion compared to Friday's HK$83 billion.

Investors remain skittish about credit markets after a credit ratings downgrade hit bond insurer FGIC, which could lead to more writedowns at banks that own securities covered by the company.

HSBC slid a further 1.9 percent to HK$112.6. Bank of East Asia, which reported in-line earnings last Friday, also fell further amid expectations of more writedowns for its collateralized debt obligation holdings hit by the US subprime crisis. Its shares ended down nearly 3 percent at HK$40.45.

China Mobile and China Telecom were ranked No 1 and No 4 by total value of shares traded. An industry realignment is expected to give China Telecom entry to the lucrative wireless market in a move that may erode China Mobile's dominant position.

The country's top fixed-line provider, which is expected to buy part of China Unicom's wireless operations, ended up 1 percent at HK$6.26.

China Mobile fell 2.1 percent to HK$118. China Unicom rose 0.7 percent to HK$19.58, having earlier tapped highs unseen since July 2000. Fixed-line operator China Netcom erased earlier gains to settle down 2.7 percent to HK$25.10.

Chinese property developer Country Garden Holdings Co Ltd surged 11.5 percent to HK$7.48 in resumed trade after announcing a bond issue plan to raise capital to repay debt and fund new and existing projects.

Agencies

(China Daily 02/19/2008 page15)