By Lillian Liu (China Daily)
Updated: 2007-08-18 09:33

A nightmarish week for Hong Kong stocks ended with dramatic fluctuations on Friday, as shares sank over 1200 points - the worst loss since September 11 - and bounced back to a relatively mild dip of 1.38 percent within hours.

Analysts said the sharp movements were triggered by Japan, the worst-hit market in the region, as the credit crisis in the US continued.

They said the Hong Kong market could turn bearish in the coming weeks, depending on the reaction of global central banks.

The benchmark Hang Seng Index opened at a promising 20761.31 points on Friday morning, but dived to 19386 points in the afternoon on continuing investor fears the US subprime loan turmoil could spiral into a broader financial crunch and hit economic growth.

The index closed at 20387.131 points, 285.26 points lower, compared to an 874.81-point loss on Japan's Nikkei.

"Share prices fell below the 20000-point level as weakness in other East Asian markets dragged down investor confidence. The loss narrowed by the end of the trading day as the impact from neighboring markets eased," said Andrew To, senior stock market analyst from Taifook Securities, a consulting firm in Hong Kong.

"It's still fifty-fifty whether the credit crisis will end the bullish market run - it all depends on central banks across the world. If they adopt timely measures to rescue the market, the loss will not be as bad as it could be," To said.

He said Hong Kong stocks reached a good level in May this year and could be due for a correction.

"Hopefully, the Hang Seng Index will reach 21000 to 21500 points next week," he said.

The China Enterprises Index of H shares, or Hong Kong-listed shares in mainland companies, fell 359.12 points to 11002.52.

The index fell 10.4 percent for the week - its worst weekly loss since June 2004 - but was up 6.4 percent for the year.

Main-board turnover was the third-highest ever at HK$115.9 billion.

Asia-Pacific stock markets all suffered their worst week in nearly a decade but Hong Kong was one of the worst performers in the morning.

Nearly all blue chips recorded heavy losses except China Mobile, supported by strong quarterly earnings thanks to a growing number of users in the world's biggest mobile phone market.

China Mobile's interim result produced a spate of stock rating upgrades and reaped an 0.2 percent gain to HK$81.

The Shanghai market also dropped 2.28 percent on Friday to 4656.574 on the weakening global market.

(China Daily 08/18/2007 page3)