Hang Seng falls to 3-month low

By Hanny Wan  |   2008-7-9  |     NEWSPAPER EDITION

HONG Kong stocks fell yesterday, dragging the benchmark index to the lowest in more than three months, on renewed concern that credit-market losses will widen, damping global economic growth.

Foxconn International Holdings Ltd, the biggest contract maker of mobile phones, slumped to the lowest since August 2005 after CLSA Ltd told investors to sell the stock. Bank of East Asia Ltd, which in February booked a US$140-million loss on its collateralized debt obligations, dropped the most in more than three months.

"Negative news is weighing on market sentiment," said Nancy Lee, a portfolio manager at Taifook Asset Management Ltd in Hong Kong. "Investors are worried there may be more writedowns for banks in the second half."

Hong Kong Exchanges and Clearing Ltd, operator of Asia's third-biggest stock market, plunged to its lowest in more than a year on concern declining trading volumes will hurt profit.

The Hang Seng Index lost 692.25, or 3.2 percent, to 21,220.81, the lowest since March 20, reported Bloomberg News. The Hang Seng China Enterprises Index, which tracks so-called H shares of Chinese mainland companies, dropped 3.6 percent to 11,293.32.

The main Hang Seng gauge has dropped 24 percent this year as credit-market losses climbed at the world's biggest financial institutions.

Lehman Brothers Holdings Inc analysts said on Monday that an accounting change may force Freddie Mac and Fannie Mae, the two largest United States lenders, to raise US$75 billion to overcome further writedowns.

Biggest loser

Foxconn plunged 10 percent to HK$6.71 (86 US cents), its lowest close since August 24, 2005. The stock was the Hang Seng Index's biggest loser in percentage terms yesterday. CLSA cut its rating on the stock to "sell" on concern that cell-phone demand is weakening.