Hong Kong shares fell 3.1 percent on Thursday to their lowest close in 18 months as investors dumped shares in Chinese firms amid deepening fears of a global slowdown and a lack of growth-supportive policies from Beijing. "Investors are extremely cautious on the global economic outlook," said Peter Pak, vice president with BOCI Research.
"And now with the US government pledging large sums of money to bail out Fannie Mae and Freddie Mac, it looks like a long road ahead," Pak said. The US government took control of the mortgage companies at the weekend in a bid to stave off further damage to the financial system, but many investors have had reservations about the deal, seeing it as a further sign of deep underlying troubles.
The benchmark Hang Seng Index closed down 611.06 points at 19,388.72, its lowest level since March 20, 2007. Mainboard turnover rose to HK$69.6 billion ($8.9 billion) from HK$65.3 billion on Wednesday. Chinese telecom stocks were also pressured by deepening concerns over the fallout from widespread industry restructuring and regulatory uncertainties.
China Mobile, the world's largest wireless carrier, dropped 5.3 percent to a 15-month low of HK$77.00 as investors worried Beijing will impose regulations that are unfavourable to the firm but will benefit its rivals.
The company, which controls two-thirds of the country's cellular market, will have to begin testing a policy soon in two cities that will let users keep their cellphone numbers when they switch to another carrier, according to Chinese media reports.
But analysts expect that such a scheme, which may be rolled out in full by 2009, will be a one-way affair, barring users from retaining their numbers when they switch to China Mobile. Shares in China Unicom, China Mobile's smaller rival, tumbled 4.8 percent. China Netcom, which is soon to be merged with China Unicom, dropped 4.5 percent.
Asia's largest oil & gas producer, PetroChina, fell 4.4 percent while China Shenhua Energy, the world's most valuable coal company, tumbled 6.4 percent. Shares in China's top listed gold producer, Zijin Mining, fell more than 10.5 percent on Thursday to a new 18-month low after gold prices slid.
The stock hit a low of HK$3.48 before recovering slightly to HK$3.51, down 9.8 percent. It has lost about 18 percent of its market value since Tuesday. The China Enterprises Index of top locally listed mainland Chinese firms slid 4.2 percent, tracking a 3.3 percent drop on the Shanghai Stock Exchange. China Construction Bank lost 3.9 percent while ICBC dropped 3.4 percent.