HK shares hit 4-mth lows in sell-off, HKEx sinks

(For Shanghai stock market reports, click [.SS])
(Adds comments from central banker on Chinese individual
investor plan)

By Rita Chang

HONG KONG, Jan 15 (Reuters) - Investors dumped Hong Kong
stocks on Tuesday in a brief spell of panic selling as investors
sought to raise cash, with bellwether and global bank HSBC
Holdings plc (0005.HK) sinking to 27-month lows.

Shares recouped some of their losses as the session neared
the midday close, with blue chips ending the morning down 1.2
percent. Hong Kong-listed shares in mainland firms, or H shares,
finished the morning session 2 percent lower.

Shipping plays, particularly dry bulk shippers, suffered
large losses after the Baltic Dry Index .BADI, an indicator for
commodity-freight rates, fell sharply for a third straight day.

There was little impact from comments by Hong Kong central
bank chief Joseph Yam, who told reporters on Tuesday he hoped for
an early launch of a much-anticipated scheme to allow individual
mainland Chinese investors to buy Hong Kong shares.

The announcement of that landmark plan had triggered a rally
in 2007's third quarter but market experts and sources said the
programme had since been stalled by government infighting and
fears it could hammer mainland Chinese stock markets.

"I certainly hope it will start soon. It is a very important
project -- a project that will facilitate the orderly outflow of
capital from the mainland of China. This is important for the
financial development of the mainland," Yam said on the sidelines
of a financial conference.

Indeed, bourse operator Hong Kong Exchanges and Clearing
(0388.HK), a barometer of market sentiment and a clear
beneficiary were that Chinese scheme to start, sank further and
was on course to close down for a fourth straight day.

"Sentiment is still weak," said Ernie Hon, strategist at ICEA
Securities. "People are adjusting their risk profile. They want
to offload to shift to cash, bonds. Sentiment will remain weak
until month-end."

The blue-chip Hang Seng Index .HSI stood at 26,159.02 by
lunch, having dropped more than 2 percent to tap lows not seen
since September.

The China Enterprises Index of H shares .HSCE dropped more
than 3 percent at one point before closing at 15,178.33.

Mainboard turnover was noticeably heavier at HK$70.7 billion
(US$9.4 billion), compared to Monday morning's HK$62.4 billion.

HSBC, the morning's most active stock, fell nearly 2 percent
to HK$121.

Hong Kong Exchanges ended the morning at HK$186, down 3
percent.

Among shippers, Pacific Basin (2343.HK) buckled 8.4 percent
to HK$9.11 and China Shipping Development (1138.HK) dropped 5.2
percent to HK$21.90. Sinotrans Shipping (0368.HK) tumbled 5
percent to HK$5.11.

Other big losers were China Railway (0390.HK), down 4.5
percent at HK$10.22. Sinoma (1893.HK), the world's largest cement
engineering services firm, dived 6.5 percent to HK$8.8.

China Mobile (0941.HK) fell 2.1 percent to HK$127.5. The
country's top wireless operator and Apple Inc (AAPL.O) have
called off talks to launch the U.S. firm's popular iPhones in
China, dashing investor speculation that the device will hit
store shelves soon and knocking China Mobile shares late on
Monday. [ID:nHKG332477]

PC maker Lenovo Group (0992.HK) notched up 5.4 percent to
HK$5.47, tracking gains in U.S.-traded peers after IBM (IBM.N)
posted better-than-expected preliminary quarterly earnings.

Esprit Holdings Ltd (0330.HK) rose 4.1 percent to HK$94.7
after its recent slump. A disclosure with the Hong Kong Stock
Exchange showed Capital Research Management bought 2.37 million
shares at HK$108.313 earlier in the month.
(US$1=HK$7.8)
(Additional reporting by Umesh Desai)
(Editing by Nick Macfie)