Hong Kong shares extended their downward slump to a fourth consecutive session on Wednesday, slipping 1.6 percent, led by Chinese banks after the nation's top lender ICBC was downgraded by Credit Suisse analysts. Bourse operator Hong Kong Exchanges & Clearing dropped more than 3 percent after reporting a 6 percent dip in second-quarter earnings and predicting continued tough times.
But some commodity-linked firms, including CNOOC and China COSCO, rose despite retreating resources prices as analysts called for firmer valuations after a month-long rout for the stocks. The Hang Seng Index closed 347.57 points lower at 21,293.32 with investors selling China-related financial and telecoms stocks.
The China Enterprises Index of top locally listed Chinese firms ended down 2.9 percent. Mainboard turnover eased slightly to HK$69.3 billion ($8.88 billion) from HK$70 billion on Tuesday.
Chinese banks tanked, weighed by worries over an economic slowdown and renewed inflation fears. The nation's second largest lender, China Construction Bank, led losses on the main index, diving 6.1 percent while top bank ICBC dropped 5.4 percent.
Credit Suisse downgraded ICBC to neutral from outperform on Wednesday as it sees the stock succumbing to profit taking on further signs of an economic slowdown in China. But the brokerage raised its target price to HK$6.27 from HK$6.
Asia's largest wireless carrier, China Mobile, dropped 1.8 percent, adding to its 5.6 percent decline this week, as investors fretted about the company's earnings amid slowing economic growth in China and regulatory uncertainty. The 11 percent fall in the stock in the last six days has wiped off more than HK$220 billion ($28.2 billion) of market capitalisation.
Its smaller rival China Unicom followed the industry leader with a 4.3 percent drop while fixed-line operator China Netcom fell 3.9 percent. China Unicom said on Wednesday it expected to get a third generation (3G) licence after it merges with China Netcom and that capital expenditure could amount to $14.6 billion in the next two years to fund wireless infrastructure.
But China's largest shipping firm, China Cosco, jumped 6 percent. Offshore oil producer CNOOC rallied 4.2 percent after falling on Tuesday to its lowest level since the end of January. China Shenhua Energy, the world's most valuable coal miner, gained 1.7 percent.
Chinese property developer Country Garden hit a new all-time low, falling 10.6 percent to HK$3.80 soon after the open on disappointment over its first-half earnings announcement on Tuesday. Morgan Stanley slashed its target price on the stock by 29 percent to HK$4.49 as it sees the company buckling under weakening property market conditions.