Hong Kong shares at worst monthly drop in 11 years

Hong Kong shares fell 2.5 percent on Friday, with the index posting its worst monthly drop since October 1997 as renewed worries over the global economy and the outlook for earnings snapped a three-day, 30 percent rally. Bank of Communications, China's No 5 lender, fell as much as 9.6 percent after it said third-quarter profit growth slowed sharply from the first half.
The stock closed down 5.4 percent after it jumped 15 percent on Thursday in a technical rebound. But property shares such as China Overseas Land remained firm after China lowered borrowing costs on Wednesday. "I do believe the rebound hasn't come to an end yet because interest rate cuts will continue world-wide over the next few weeks," said Andrew To, sales director of Tai Fook Securities.
He expects the Hang Seng Index to touch 15,000 in two weeks. The benchmark index fell as much as 5 percent on Friday after sharp gains this week fuelled in part by another round of rate cuts world-wide. The index ended down 361.18 points at 13,968.67, taking its losses for the month to about 22 percent, the biggest monthly fall since October 1997. The blue chip index is now about 57 percent off its life high hit in October last year.
Recent high-fliers fell, with heavyweights China Life and HSBC leading the slide. Shares of HSBC slid 3.6 percent to HK$92.00 after the bank's stock had soared more than 10 percent to end at an intraday high of HK$95.4 on Thursday. China Life, which had risen rose more than 12 percent on Thursday, eased 4.5 percent to HK$20.35.
Consumer goods exporter Li & Fung plunged 13.14 percent after the stock surged about 20 percent on Thursday. PetroChina fell 3.4 percent after its roughly 20 percent gain the previous day. Mainboard turnover fell to HK$58.47 billion ($7.5 billion) from HK$75.1 billion on Thursday. The China Enterprises Index of top locally listed mainland Chinese companies slid 2.3 percent to 6,611.15. Chinese property shares bucked the down trend, with China Overseas Land up 6 percent, smaller rivals Country Garden up 4.7 percent and Agile Property up 5.1 percent.