Hong Kong stocks plunged 630.35 points to close at 25,837.78 on Tuesday with the sharp fall of banking giant HSBC among a big slump in the benchmark index.
The blue-chip Hang Seng Index ended down 630.35 points, or 2.4 percent, at 25,837.78 after rising to a high of 26,800.52 earlier in the session. The index has fallen 7 percent since the start of 2008.
Turnover totaled 121.07 billion Hong Kong dollars (15.54 billion U.S. dollars), up from 109.67 billion (14.07 billion U.S. dollars) Monday.
Analysts said they expect the blue-chip index to find support near current levels following several sessions of declines sparked by concerns over a possible U.S. recession this year. But analysts said they expect a technical rebound in the Hang Seng Index following recent falls, with strong support at 25,500.
HSBC ended down 2.1 percent at 120.80 Hong Kong dollars - a 26 month-low - after Goldman Sachs, one of the world's largest investment banks, added the bank into its "Conviction Sell" list and lowered its target price to 114 Hong Kong dollars from 119 Hong Kong dollars. HSBC's decline alone contributed to an 82-point drop in the Hang Seng Index.
Goldman Sachs said it now forecasts U.S. property prices will fall by 20 percent to 25 percent this year amid a possible recession, leading to "unnerving prospects" for HSBC and its U.S. mortgage unit, Household International. It expects more than 70 percent of Household International's subprime loans to fall into negative equity this year.
Another blue-chip heavyweight, China Mobile, fell 4.1 percent to 124.80 Hong Kong dollars as uncertainties remain regarding a planned overhaul of the Chinese telecom industry. The Chinese government has yet to officially map out its plans to reform the nation's fixed-line and mobile-phone carriers.
Among other China-related companies, dry-bulk shipping firms were some of the biggest decliners as investors dumped them on concerns over a sector downturn, analysts said. The Baltic Dry Index - an international measure of dry-bulk shipping rates - Friday registered its largest one-day drop since 1985. China Cosco Holdings fell 7.6 percent to 18.90 Hong Kong dollars, while China Shipping Development ended down 6.7 percent at 21.55 Hong Kong dollars.
(Xinhua News Agency January 16, 2008)
