HK banks' drop hits market

By Hanny Wan  |   2008-8-6  |     NEWSPAPER EDITION

HONG Kong stocks fell yesterday, dragging the benchmark index to its worst drop in three weeks, after Bank of East Asia Ltd and HSBC Holdings Plc said earnings declined on losses related to subprime-mortgage defaults in the United States.

Bank of East Asia, Hong Kong's third-biggest lender by assets, closed at a two-year low. HSBC retreated the most in three weeks. Hong Kong Exchanges & Clearing Ltd fell to the lowest in more than two weeks after Goldman, Sachs & Co cut its price estimate for the stock by 10 percent. CNOOC Ltd, China's largest offshore oil producer, slumped the most in more than two months after crude oil prices dropped on Monday to a three-month low, Bloomberg News said.

"The outlook for banks doesn't look good and sentiment remains poor," said Nancy Lee, a portfolio manager at Taifook Asset Management Ltd.

The Hang Seng Index lost 565.17, or 2.5 percent, to close at 21,949.75, its biggest drop since July 15. The index has fallen 21 percent this year as gains in raw-material prices and credit-market losses raised concern economic and profit growth will slow.

Bank of East Asia tumbled 8.3 percent to HK$33.20 (US$4.25), its lowest close since August 8, 2006. Hang Seng Bank Ltd, a unit of HSBC, slipped 0.6 percent to close at HK$154.50.