Hong Kong stocks fall sharply yesterday, with the benchmark Hang Seng Index sinking to its lowest point in more than a year. The blue-chip index shed 611.06 points, or 3.06 percent, to close at 19,388.72. It was the worst finish since March 20 last year, when the index ended at 19,332.60. AP

Hong Kong stocks plunged 3.06 percent yesterday, the steepest fall in two months, as investors took flight from holdings in blue chip companies on regulatory worries and global financial market uncertainties.

The benchmark Hang Seng Index (HSI) is expected to tumble further for the coming two weeks and test the level of 19,000 on fears the disastrous consequence of the US credit crisis hasn't completely shown, said Patrick Yiu, an associate director at CASH Asset Management.

China Mobile dropped by 5.3 percent to a 13-month low of HK$77, the biggest drag on the index, on deepening concerns over the widespread industry restructuring and news reports on the carrier's narrowing market dominance.

HSBC Holdings, an HSI heavyweight, slumped 1.5 percent after Lehman Brothers Holdings posted a loss bigger than analysts' estimates.

"No one knows how long the credit crunch is going to last even though the US Treasury has stepped in," said Francis Lun, general manager of Fulbright Securities in Hong Kong.

"The market sentiment is very poor, and investors don't seem to have any confidence, even shares in promising firms face challenges of selloff," said Tony Tong, a senior analyst at China Everbright Research.

The HSI closed at 19,388.72 after a drop of 611.06 points, its steepest drop since July 15 and the lowest close since March 20, 2007.

The benchmark index has tumbled 30 percent this year, as a global slowdown and more than $510 billion in writedowns and credit losses at financial institutions hurt profits.

The Hang Seng China Enterprises Index, which tracks Hong Kong-listed mainland companies, fell 4.2 percent to 10,052.03. Futures expiring in September decreased by 3 percent to 19,330.

Falls in China Mobile was triggered by a report by Nanfang Daily yesterday saying the regulators plan to allow China Mobile subscribers in the cities of Tianjin and Shenzhen to retain their phone numbers if they switch to other carriers.

Shares in China Unicom, China Mobile's smaller rival, tumbled 4.8 percent. China Netcom, which is soon to be merged with China Unicom, dropped by 4.5 percent.

China Everbright's Tong said many "worth-holding" stocks have been heavily sold, but investors shouldn't panic. "They should stop dumping and re-evaluate the stocks."

HSBC fell to HK$122.20 yesterday following South Korea's Financial Services Commission's remark about the bank being unlikely to get a ruling on its purchase of Korea Exchange Bank this month.

Bank of China, the country's largest foreign exchange bank, fell 1.2 percent and ended at HK$3.39.

Shipping stocks also retreated, led by China Cosco Holdings. The world's biggest dry-bulk ship operator dropped by 5.7 percent to HK$9.6, the lowest since June 2007. China Shipping Development, a crude oil and dry-bulk carrier, declined 7.7 percent to HK$12.22.

(HK Edition 09/12/2008 page3)