Hong Kong shares drop

Hong Kong shares dropped 3.4 percent on Wednesday as China Construction Bank slid after Bank of America sold down its stake while telecom stocks retreated after Beijing handed out long-awaited 3G licences. Turnover swelled to HK$90 billion ($11.6 billion), its strongest since September 2008, but Hong Kong shares under performed most regional rivals, which were boosted by hopes for an economic recovery later this year.
The Hang Seng Index finished 522.05 points lower at 14,987.46 points after testing a three-month high at the open. China Mobile fell 5.5 percent to HK$78.45 after Beijing handed out the long-awaited licences for next generation (3G) mobile networks Wednesday afternoon. The world's largest telecom has been granted the licence for the untested home-grown TD-SCDMA network which is expected to be more costly and complicated to roll out than proven technology that Unicom and China Telecom will using.
The spending on network equipment by the three-telecom carriers is pegged at $41 billion over the next two years. China Unicom, which soared nearly 17 percent in anticipation of the issuance of 3G licences, pulled back 10.6 percent to HK$9.19 while China Telecom gave up 5 percent.
Telecom equipment makers also gave up a part of their recent gains with ZTE down 8.5 percent and China Communications Construction falling 7.2 percent. Taiwanese handset maker Foxconn International Holdings, which was 2008's worst performing blue chip, jumped 5.4 percent, taking its total gains since the beginning of the year to more than 50 percent.
CITIC Pacific, another stock that was hammered down in 2008 after revealing a $2 billion hedging loss, climbed 6.4 percent. China Construction Bank slid 8.8 percent to HK$4.06 while top lender ICBC gave up 7.3 percent in sympathy to fall to HK$3.96.
Bank of America sold more than 5.6 billion shares, or nearly 13 percent of its holding, in Construction Bank at HK$3.92 apiece, a 12 percent discount to the stock's last closing price. The China Enterprises Index of top locally listed mainland Chinese firms slipped 4.6 percent to 8,244.68, weighed down by losses in banking shares.
Shares in Semiconductor Manufacturing International Corp (SMIC) gained 2.9 percent after sources said China's top contract chip-maker was discussing the possibility of selling a strategic stake to Intel Corp. Shares in power equipment maker Shanghai Electric Group slid 13.2 percent after it cut its net profit forecast for 2008.