* Volume of trade falls to five-month low
* Chinese airlines rally on reports of cash infusion
* Foxconn tumbles on bearish earnings outlook (Updates to close)
By Jun Ebias
HONG KONG, Nov 17 (Reuters) - Shares in mobile phone maker Foxconn International Holdings (2038.HK) slid on Monday on a grim outlook for the U.S. economy, the biggest market for Asian goods, but Hong Kong’s main index ended a volatile day little changed.
The volume of trade fell to its lowest level in five months, as investors were discouraged by the global economic downturn. Japan slipped into a recession in the third quarter, data released on Monday showed. [ID:nT366159]
Foxconn, which makes handsets for Nokia and Motorola, tumbled 11.3 percent after Goldman Sachs reiterated its sell rating on the stock.
“With a shrinking handset market, less operating leverage, and rising competition from emerging vendors in China and potentially Taiwan, we still do not see compelling reasons to own FIH shares,” Goldman Sachs said in a report.
Bourse operator Hong Kong Exchanges & Clearing (0388.HK) slid 7.6 percent on concerns about its earnings outlook due to the sluggish local stock market.
Morgan Stanley on Monday slashed its target price on HKEx to HK$38 from HK$75 as it expects the volume of trade on the Hong Kong bourse to fall further in 2009 to around HK$47 billion a day from about HK$50 billion.
But Chinese airlines surged as their parent companies sought government aid to offset rising costs and weak demand. [ID:nSHA292554]
China’s largest carrier by fleet size, China Southern Airlines (1055.HK), led the rally with a 12 percent gain, while China Eastern Airlines (0670.HK) soared 7.6 percent. The nation’s flag carrier Air China (0753.HK) rose 2.5 percent.
“Reports of financial aid lend support to aviation stocks. Falling oil prices also helped,” said Louis Wong, research director at Phillip Securities.
Oil prices fell more than $1 to below $56 a barrel on Monday on declining demand due to the weakening global economy.
The benchmark Hang Seng Index .HSI closed down 13.13 points at 13,529.53. Mainboard turnover fell to HK$39.8 billion ($5 billion), its lowest since June, from HK$44.7 billion on Friday.
The index swung from gains to losses, falling by nearly 2 percent then rising by 1.4 percent earlier in the session.
The China Enterprise Index .HSCE of top locally listed mainland Chinese companies fell 0.8 percent to 6,968.09.
CITIC Pacific (0267.HK) rebounded with a 3.1 percent gain. The stock was earlier down by as much as 4.9 percent after the South China Morning Post reported that the Beijing-backed investment conglomerate had no immediate plans to sell assets to boost its finances.
“We saw some bargain hunting on CITIC Pacific,” said Francis Lun, general manager at Fulbright Securities. “The Chinese government is behind it.”
Wing Hang Bank (0302.HK) fell 4.5 percent. The lender said last Friday it would make a full provision for its exposure to HK$377 million ($48.65 million) worth of bonds denominated in the U.S. dollar, euro and New Zealand dollar.
Bank of East Asia (0023.HK) rose 3.2 percent after the lender announced an agreement with Sumitomo Mitsui Banking Corp to jointly enhance their business potential on the mainland. (Editing by Alex Richardson)