Credit woes slam HK shares, Nine Dragons plunges

(For Shanghai stock market reports, click [.SS])
(Adds omitted index closing prices)

By Rita Chang

HONG KONG, March 17 (Reuters) - Hong Kong stocks tumbled
more than 5 percent on Monday, weighed by mounting fears of
further fallout from the troubled credit markets after brokerage
JPMorgan Chase bailed out stricken rival Bear Stearns BSC.N.

Top Chinese packaging paper supplier Nine Dragons (2689.HK)
dived more than 40 percent at one point after its interim
earnings showed that rising costs were squeezing margins.

But investors sought safety in the city's utilities, sending
Hongkong Electric (0006.HK) to a fresh record.

Hong Kong blue chips sank to lows not seen since August,
when turmoil in the subprime debt market sparked massive
sell-offs in global equities. The benchmark Hang Seng Index
.HSI closed down 5.18 percent at 21,084.61.

Hong Kong-listed shares in mainland companies, or H shares,
tumbled 7.2 percent to 11,037.09 in their worst one-day
percentage loss in nearly two months.

"The mood is one of disbelief that something could happen so
quickly, but there's a sense of relief that JPMorgan stepped up
to provide some kind of platform," said Miles Remington, sales
and trading director at BNP Paribas.

"You would suspect in the short term we would test 20,000
(points). If we are in trouble, we should be wiping out the
gains of the last six months."

JPMorgan Chase & Co (JPM.N) bought Bear Stearns for a
rock-bottom price of $2 a share while the U.S. Federal Reserve
set an emergency interest rate cut and opened direct lending to
Wall Street [ID:nN16500718].

Mainboard turnover was a robust HK$94.4 billion (US$12.1
billion) compared with Friday's HK$88.3 billion.

Among financials, British bank HSBC Holdings Plc (0005.HK),
the day's most traded stock, slid nearly 4 percent to HK$118.10.

Bank of East Asia (0023.HK) hit lows not seen since October
2006 and finished at HK$36.25, down nearly 9 percent.

The city's power companies were among the day's few bright
spots.

Hongkong Electric jumped 3.3 percent to HK$50.90, topping an
all-time high set last week, and CLP Holdings (0002.HK) rang up
a 1.1 percent gain to HK$65.30.

Nine Dragons struck lows not seen since August 2006 as its
earnings disappointed after rising materials costs cut into
profit growth [ID:nHKG363593]. The sell-off spread to rival Lee
& Man Paper (2314.HK), which plummeted 26.8 percent to HK$12.20.

Sinopec Corp (0386.HK) tumbled for a third straight session.
Shares in Asia's top refiner fell 8.1 percent to HK$6.14 on
nagging fears it would face losses, squeezed between record
crude prices and caps on prices it can charge on refined oil
products.

However, UBS upgraded Sinopec shares to "buy" in a report
dated Monday, saying the sell-off, which began last week, was
overdone.

China's Shenhua Energy Co Ltd (1088.HK) sputtered 8.9
percent lower to HK$32.95. The world's top coal producer by
market value lagged forecasts when it posted a 16.6 percent rise
in 2007 earnings, as it churned out 16 percent more of the
hydrocarbon.
(US$1=HK$7.8)