US slowdown worries hammer HK stocks
Hong Kong stocks slid yesterday after the unemployment level in the United States jumped to a two-year high, sparking fears that the world's biggest economy is headed for a slowdown.
The Hang Seng Index fell as much as 2.98 per cent or 821.15 points before a late rally erased some losses. It ended the day down 340.2 points or 1.24 per cent at 27,179.49.
'People are not sure how bad the economy is going to be for the US,' Taifook Asset Management assistant director Nancy Lee said. 'Confidence is a little bit fragile.'
A slowdown in the US, Hong Kong's second-biggest export destination, could cut demand for the city's products.
Shipments to the US already decreased 3.4 per cent in November, according to Hong Kong's Census and Statistics Department.
Li & Fung, a supplier to Wal-Mart stores, dropped the most in more than three years yesterday, losing 6.61 per cent to end at HK$28.95.
Shipping companies Cosco Pacific and China Merchants Holdings also fell. Cosco declined 4.33 per cent to HK$19.42 while China Merchants dipped 4.19 per cent to HK$44.55.
Chris Tang, the chief investment officer at Marco Polo Pure Asset Management, said more negative news from the US could further hurt Hong Kong equities because 'the Hong Kong market is always heavily influenced by the US market'.
Hong Kong's market paced a sell-off across the region, with Taiwan losing 4.11 per cent, the Philippines shedding 2.6 per cent and Thailand retreating 1.63 per cent.
The MSCI Asia Pacific Index dropped 2.2 per cent to 152.63 points.
US stocks retreated by the most in three weeks on Friday after a government report indicated that unemployment had risen to 5 per cent last month from 4.7 per cent in November. The Dow Jones Industrial Average fell 1.96 per cent. At midday yesterday, it was up 0.42 per cent.
Hong Kong property stocks staged a late rally yesterday on speculation that the US Federal Reserve will cut its key interest rate on January 31 and prompt the city's banks to do likewise, increasing appetites for real estate investment.
'There are not many sectors that are resilient, so that is one of the reasons property is gaining investor support ahead of the rate cut,' said Daiwa Asset Management assistant director Mona Chung.
Ms Chung added that the US could cut its key rate by as much as 50 basis points to 3.75 per cent after reducing it by 25 basis points last month.
Sun Hung Kai Properties added 2.23 per cent to HK$169.80 and Henderson Land Development rose 2.42 per cent to HK$76.30.
MTR Corp was the biggest winner, jumping 9.06 per cent to close at HK$34.90. The stock extended its gains to a fifth day, during which time it has increased in value by 24.42 per cent.
The operator of the city's underground rail system has increased its property development rights after taking over rival Kowloon-Canton Railway Corp's operations last month.
