Hong Kong share prices closed 1.01 percent lower on Tuesday led by banks and property stocks as interest rate worries came to the fore again in the run-up to US Federal Reserve's policy meeting next week, dealers said. They said China stocks extended Monday's falls on concerns over the mainland's new credit-tightening measures.
The Hang Seng Index closed down 159.89 points at 15,608.97, off a low of 15,555.24 and a high of 15,709.0. Turnover was 22.8 billion Hong Kong dollars (2.9 billion US). PCCW was in focus, posting sharp gains after news that it is evaluating an offer from a third party to acquire the company's telecommunications and media related assets.
PCCW was up 0.40, or 8.33 percent, at 5.20 Hong Kong dollars. "The weakness in the market is a reflection again of investors' anxiety over rising interest rates," said Jackson Wong, investment manager at Tanrich Securities. "Everyone is looking forward to next week's Fed meeting and the accompanying statement which will give us clues on whether the Fed would want to continue with the rate hike cycle after June," he said.
The US Federal Reserve is expected to raise its key interest rate again next week, with some investors speculating that the increase could be as high as 50 basis points. Cheung Kong was down 0.90 at 81.40, Sun Hun Kai lost 0.70 at 77.0 Henderson Land dropped at 37.75 and New World Development fell 0.20 at 11.30. HSBC was down 1.10 at 134.20, Hang Seng Bank lost 0.50 at 96.0 and BOC Hong Kong was down 0.10 at 14.75.
Wong said the market was also weighed down by selling in China-related stocks following new credit-tightening measures on the mainland. The People's bank of China announced late last Friday that it is hiking the reserve-requirement ratio for commercial banks by half a percentage point, in an effort to curb lending growth.
"There was heavy profit-taking in China-related property counters since investors believe the real estate business will be among the sectors to be affected by the credit tightening," Wong of Tanrich Securities said. China Unicom fell 0.15 at 6.70, PetroChina dropped 0.15 at 7.45 and China Mobile was down 0.60 at 40.90.