Hong Kong share prices closed 2.52 percent lower on Thursday, following a fall on Wall Street and on liquidity fears in China, dealers said. The benchmark Hang Seng Index finished down 544.79 points at 21,050.73. Turnover was 78.69 billion Hong Kong dollars (10.15 billion US).
And Metallurgical Corp of China tumbled on its debut as many investors saw its offer value as too high, while enthusiasm for initial public offerings is cooling, analysts said. The firm closed at 5.61 dollars, which was 11.7 percent below its initial public offering price of 6.35. Analysts see the market consolidating further in the near term on fears the US Federal Reserve will scale back some of its economic support measures.
The Fed held rates steady at near zero percent Wednesday and highlighted signs of economic recovery. But it also indicated it will slow the purchase of bonds, which was taken as a signal interest rates could soon start to rise.
Hong Kong's peg to the greenback generally means any rate adjustments by the Fed are felt in the Chinese city. "I don't think there will be any technical rebound as investors are worried the US central bank will tighten money supply," Francis Lun, general manager at Fulbright Securities told Dow Jones Newswires.
Regional markets fell Thursday due to weakness on Wall Street overnight. The Dow Jones Industrial Average lost 0.83 percent after the Fed announcement. HSBC lost 2.3 percent to 88.70 Hong Kong dollars, contributing 74.99 points to the broader index's decline. ICBC fell 2.8 percent to 5.89 and Bank of Communications dropped 4.1 percent to 9.52. Property counters also fell on the rates fears. Henderson Land slumped 4.0 percent to 50.20 and Sun Hung Kai Properties fell 2.3 percent to 112.10.
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