Shares in Hong Kong and China fell on Friday, joining a global stock market rout, as investors dumped riskier assets on worries over sovereign debt problems in the eurozone and poor jobs data in the United States. Hong Kong shares retreated to their lowest in five months at midday, with Europe-focused retailer Esprit Holdings and Europe's biggest bank HSBC sharply lower.
China's key stock index closed 1.87 percent down, with resources weak as soft overseas markets, bank lending curbs and the outlook for more new share supplies weighed on the market. The benchmark Hang Seng Index fell 3.33 percent, its worst daily percentage drop in over two months, or 676.56 points to 19,665.08, the lowest since September 2, 2009. Turnover rose to HK$77.5 billion ($10 billion) from Thursday's HK$61 billion.
The HSI closed below its 200-day moving average - often used as an indicator of longer-term trends - for the first time since April 30, 2009. For the week, the HSI fell 2.3 percent, its third weekly drop. The China Enterprises Index of top locally listed mainland Chinese stocks shed 4.08 percent to 11,131.78. The market may recover next week, as investors may scoop up beaten down stocks, dealers said.
"There will be bargain-hunting. Investors will be selectively buying stocks," said Joseph Lau, managing director at Tai Fook Asset Management. Esprit shed 4.5 percent. The former chairman of the world's No 7 fashion retailer sold shares worth $385 million. The stock was also weighed down by concern about Europe, the retailer's biggest market overseas.
HSBC was down 3.8 percent. Also hurting sentiment was a report that a senior US senator planned to refer HSBC Holdings to the US bank regulator in connection with questionable accounts it provided for senior Angolan officials. Chinese PC maker Lenovo Group tumbled 10.2 percent, after it said profit may fall in the current quarter because of higher component costs.
Metal counters extended their slide after gold prices fell to three-month lows on Thursday. Gold miners Zijing Mining declined 6.8 percent and Realgold Mining was 6.8 percent lower. Chalco slumped 6 percent and Angang Steel retreated 5.8 percent.
Debutant China SCE Property reversed earlier losses to end up 4.6 percent. The Shanghai Composite Index ended at 2,939.402 points, posting a 1.7 percent loss for the week and its third weekly fall in a row.
The market has been weighed down by worries about credit tightening and heavy share supplies, fuelled by steady approvals of new initial public offerings. Losing Shanghai A shares outnumbered gainers by 744 to 160, while turnover slipped to 110 billion yuan ($16.11 billion), from Thursday's 114 billion yuan.
Resource shares were pressured by weakness on Wall Street and in the commodities markets. China Shenhua Energy sagged 3.15 percent to 28.30 yuan, while Shandong Gold sank 4.04 percent to 63.85 yuan. "The index was weighed down by overseas markets and is expected to fluctuate around 3,000 points in the short term," said Xu Yinhui, senior analyst at Guotai Junan Securities in Shanghai.
He said a number of factors may set the index drifting lower, including uncertainty over the policy outlook after the week-long holiday for the Lunar New Year, which falls on February 14, as well as January economic data due next week and the dollar's strength. Analysts said the index was likely to be range-bound in the near term between its 250-day moving average, now at 2,862 points, and the 125-day moving average, at 3,083 points.
The index has lost 10 percent since the start of the year.
The Shanghai property index dropped 2.83 percent to 4,029.443 points while sector heavyweight China Vanke lost 2.23 percent to 9.20 yuan, remaining under pressure from policy moves to curb possible property market bubbles. The official China Securities Journal reported on Friday that several banks had been asked to control lending in February, which may affect credit extended to personal finance firms and small companies.
Share supply is expected to be boosted this year in part by the launch of listings of foreign companies in Shanghai. The Shanghai Securities News reported on Friday that the Shanghai Stock Exchange was seeking an easing of rules for domestic listings of "red chips", Chinese companies incorporated and listed in Hong Kong, as it proceeds with plans to allow initial public offerings by foreign firms.