October 24, 2008 / 9:13 AM / in 9 years

Recession worries shave 40 pct off HK shares in 8 wks

6 Min Read

* HSI falls below 13,000 points for the first time in 4 yrs

* Main index down nearly 10 pct this week, eighth weekly loss

* HSBC plunges on concern over rising bad debts in Asia

* Resources mauled by demand concerns (Updates to close)

By Parvathy Ullatil & Jun Ebias

HONG KONG, Oct 24 (Reuters) - Hong Kong shares slid 8.3 percent to a four-year low on Friday, with global lender HSBC (0005.HK) posting its biggest one-day loss since the Asian financial crisis, on a gloomy outlook for corporate earnings.

The blue-chip index ended the week 13 percent lower, having shed more than 40 percent in its uninterrupted eight-week losing streak.

"The market is pretty desperate and at a loss. Four days running of big losses, though the turnover is quite low," said Howard Gorges, vice chairman South China Securities.

"People are just standing aside. These are dangerous markets to play around with. That's the main reason for getting into cash."

The benchmark Hang Seng Index .HSI finished 1,142.11 points lower at 12,618.38, its lowest level since August 2004. The main index has plunged nearly 55 percent so far this year after a stellar 39 percent rally in 2007.

"With investors now gripped by fears of a severe global recession, our earlier hopes that Asian markets may go through a period of consolidation, following the significant declines of the past two weeks, have been dashed," said Mun Hon Tham, analyst with Daiwa Securities.

"...we think there could be a further 25 percent downside to the Asia ex-Japan markets from current levels," he said. Chinese banks were beaten down ahead of key earnings on Friday.

Tokyo's Nikkei average .N225 slid 9.6 percent on Friday, while Seoul's KOSPI .KS11 slumped 10.6 percent.

Hsbc, Stanchart Dive

HSBC (0005.HK) and Standard Chartered (2888.HK) were slammed on growing concerns about the health of emerging economies.

"Hong Kong banks are not normally sold down like this in one day. They are normally seen as pretty resilient. So what we are seeing is forced selling by people who have large margins to cover," said South China's Gorges.

HSBC (0005.HK) (HSBA.L) plunged 12.5 percent to its lowest close in more than five years after Morgan Stanley cut its target price to HK$75 from HK$100 and revised down the bank's 2008 earnings estimates by 3 percent amid weakening Hong Kong revenues and increased bad debts throughout Asia.

Standard Chartered (2888.HK) slid 13.5 percent to a five-year nadir after Morgan Stanley slashed its target price to HK$125 from HK$250 and lowered its earnings estimates by 14 percent for 2008 amid slower revenue growth.

ICBC (1398.HK) slid 7.4 percent, while No.2 lender China Construction Bank (0939.HK) lost 8.5 percent ahead of their results due later in the day.

Bank of Communications (3328.HK) plunged 10.7 percent.

The China Enterprises Index .HSCE of top locally listed mainland Chinese companies had fallen 9.4 percent to 5,802.71.

Turnover stayed slim at HK$56.1 bilion ($7.2 billion) against Thursday's HK$56.5 billion.

"The Hang Seng Index may to fall to 10,000 points before investors return to the market. At that level we could see massive buying interest," said a Hong Kong-based stock broker.

"I'm not scared, in fact you never have to be scared," said Kelvin Chan, a Hong Kong retail investor looking to bargain-hunt. "It's a good time to buy as it (the market) is so low," he added.

Resources Plummet on Demand Worries

Energy stocks were mauled amid concern over slackening demand in China -- the world's fastest growing economy. Asia's largest oil & gas producer, PetroChina (0857.HK), fell 11 percent while offshore specialist CNOOC (0883.HK) dropped 9 percent. Top Asian refiner Sinopec (0386.HK) toppled 10.7 percent.

Coal miner China Shenhua Energy (1088.HK) shrank 16.7 percent. Gold miner Zijin Mining (2899.HK) nosedived 16.3 percent after the price of the precious metal fell on a stronger greenback and weak oil prices.

Shares in Hutchison Whampoa 0013.HK, billionaire Li Ka-shing's flagship conglomerate, slumped 6.6 percent. The ports-to-telecoms conglomerate confirmed it will halt uncommitted spending until June next year and will review all new investments amid a volatile global financial market.

Hopewell Holdings (0054.HK) jumped 4.6 percent while Hopewell Highway Infrastructure (0737.HK) rallied 11.4 percent on a local media report saying the companies planned to pay special dividend totalling HK$5.42 billion after bowing out of financing the proposed HK-Macau-Zhuhai bridge. (Additional reporting by James Pomfret; Editing by Anne Marie Roantree)

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