Hong Kong shares fell 2.3 percent yesterday as investors were disappointed by a lack of market-boosting measures from Beijing.

But one company to buck the trend was retailer Esprit, which rose 2.7 percent.

Shares in the apparel and accessories seller gained after rival Hennes & Mauritz posted forecast-beating second-quarter earnings that suggested strong demand in European economies despite their lukewarm growth.

Aluminum Corp of China (Chalco), which has given up more than 16 percent this month, slid 5.9 percent to a five-month low as analysts warned of lower profits on increased production costs of alumina.

The Hang Seng Index (HSI) closed down 528.19 points at 22,797.61, with Esprit the only gainer among the index's 43 constituents.

"The market was overdone compared with the overseas markets, but it was not that bad compared with the mainland," said Andrew To, sales director from Taifook Securities, referring to a 6.5 percent plunge in Shanghai stocks. "But no players were willing to brave the volatile market."

Mainboard turnover fell to HK$59.04 billion from HK$71.21 billion on Wednesday.

Market watchers expect to see a small rebound in local shares next week. "When the market sentiment is this bearish, traditional wisdom tells us it's time to buy. Every time the HSI dips below 23,000 we have seen investors come out of the woodwork to accumulate shares," said Patrick Shum, a strategist with Karl Thomson Securities.

The China Enterprises Index of top locally listed mainland companies fell 3.1 percent as mainland financials tumbled in line with Shanghai's Composite Index, which hit a 16-month closing low. Top insurer China Life slid 2.8 percent, and smaller rival Ping An Insurance lost 3.4 percent.

Industrial & Commercial Bank of China, the nation's largest lender, skidded 2.3 percent, and Bank of Communications fell 3.2 percent.

Local property stocks joined the downslide, with Hang Lung Properties dropping 3.5 percent. Sun Hung Kai Properties, which had gained 3.5 percent in the previous session after a broker upgrade, lost 2.6 percent. Sinopec Corp, which had gained nearly 15 percent this week on speculation of higher refined-product prices on the mainland, retreated nearly 4 percent. PetroChina lost 3.4 percent as many analysts ruled out the possibility of a petroleum price hike ahead of the Beijing Olympics in August.

Li & Fung, which supplies consumer goods to US retail giant WalMart, fell 5.2 percent on fears of slowing economic growth and reduced consumer spending in the world's largest economy.

Reuters

(HK Edition 06/20/2008 page2)