Hong Kong shares slid 1.5 percent on Monday in thin turnover, with bleak jobs data from the US intensifying recession worries and higher oil prices expected to further erode company profits. Resources stocks and related counters also fell on concern that a slowdown in the Chinese economy could curb its voracious appetite for commodities.
The Hang Seng Index closed down 1.5 percent or 347.68 points at 22,514.92. With investors scrambling for the sidelines amid further market losses, mainboard turnover fell to HK$49.1 billion ($6.3 billion) from HK$60.7 billion on Friday, one of the lowest levels so far this year.
Container and port operators slid on increasingly negative forecasts from analysts on global trade. The Baltic Dry Index, which gauges changes in the price of shipping commodities, has been on the decline for more than 3 weeks, giving up 11 percent since July 10.
Cosco Pacific, the world's fifth largest container port operator, tumbled 5.9 percent, while China Shipping Container Lines dropped 4.6 percent, adding to last week's 15 percent fall.
Metal stocks also took a sharp hit, with Maanshan Iron & Steel plunging 6.3 percent and Angang Steel falling 5.4 percent on concern over softening demand and increasing raw material costs. Industry leader Baoshan Iron & Steel dropped 4.9 percent in Shanghai on concern that ebbing demand may dampen product prices.
Market watchers had been hoping to see a strong rally in local shares in August with Beijing Olympics fever prompting market-boosting measures from the Chinese government. "It's a bit of an anti-climax, but with the US economy teetering on the brink of a recession Hong Kong stocks look poised to sink further. The HSI may slip below 22,000 this week," said Francis Lun, general manager with Fulbright Securities.
Europe's largest bank, HSBC Holdings closed unchanged ahead of its latest earnings report. The global lender said late in the afternoon that first-half profit fell 28 percent to just over $10 billion, in line with analysts' forecasts, as bad debts on US home loans and asset writedowns countered strong Asian growth. HSBC's London shares fell 1 percent in early European trade.
HSBC unit Hang Seng Bank, which was also due to announce its first-half earnings later on Monday, fell 2 percent. Index telecoms heavyweight China Mobile slipped 1.2 percent while top insurer China Life gave up 1.7 percent.
Asia's largest refiner, Sinopec Corp, which has been struggling with the wide gap between soaring international crude prices and regulated petroleum product prices in China, slipped 2.3 percent. Crude prices hovered close to $126 a barrel on Monday on concern over Iran's nuclear activities.
The China Enterprises Index of top locally listed Chinese firms slipped 2 percent. Li & Fung Ltd which supplies consumer products to retail giant Wal-Mart, dropped 3.4 percent on US recession worries. China Mengniu Diary fell 3.4 percent to HK$22.80 after the country's top diary producer shareholders sold HK$1.26 billion worth of existing shares at HK$22.02 each - a 6.7 percent discount to Friday's closing price.
China Shenhua Energy fell 3 percent and smaller rival China Coal Energy slid 2 percent. Guangshen Railway slipped 5.7 percent after Japanese brokerage Nomura said in a report last week that the stock could be ousted from the China Enterprises Index and replaced with bigger rival China Railway Contruction Corporation. China Railway Construction finished up 0.7 percent.
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