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Shares slide 2.4% to 15,127.51 as oil firms nosedive

Updated: 2008-12-20 07:39

By Kwong Man-ki(HK Edition)

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Hong Kong stocks on Friday slid for the first time in five days led by HSBC on recapitalization worries; oil producers also plummeted after the sharp fall in crude prices overnight.

The benchmark Hang Seng Index (HSI) shed 2.39 percent or 370.3 points on Friday to close at 15,127.51 scaling down the gain for the whole week to 2.5 percent.

HSBC, Europe's largest lender, fell 6.19 percent to HK$76.55 on persistent worries about credit deterioration in its UK and US businesses and a possible capital raising need. The stock has fallen about 9 percent in two sessions.

Crude oil prices fell from their July peak of $147 a barrel to $36 on Thursday amid slumping global demand for the commodity, dragging shares in CNOOC down 4.88 percent to end the day at HK$7.21.

Shares in Asia's largest oil & gas producer PetroChina dropped 3.31 percent.

Oil refiner Sinopec benefited from the fall in crude price, edging up 2.71 percent to HK$5.3.

Mainboard turnover rose to HK$57.4 billion from HK$52.3 billion on Thursday.

Patrick Yiu, an associate director at CASH Asset Management, said the stock market will see a seesaw trade before the end of the year. "The index will probably trade between 14,700 and 15,600 points," he said.

Yiu doesn't expect the HSBC to extend its losses, as he said investors are eager to cash in the stocks when it hit HK$75-76. "Factored in the cut in dividend, shareholders can enjoy a yield of 6 to 7 percent if the stock drops to that level," Yiu added.

Cathay Pacific, Asia's third-largest airline, rallied 5.37 percent with weaker international crude oil prices seen lowering the airline's fuel costs as it battles a slowdown in cargo and passenger traffic.

Shares in China Southern Airlines shot up 7.63 percent after Beijing leveraged on falling international crude prices to cut domestic jet fuel costs by nearly a third. China Eastern Airlines vaulted 12.5 percent to HK$1.26.

The China Enterprises Index of top locally listed mainland firms fell 1.4 percent to 8435.31.

Yiu said the mainland's property and financial counters will lead the market in the coming trading sessions before the end of the year. "The speculation on further rate cut by the Chinese central bank and the hope of more stimulus measure will lift the stocks," he said.

Shui On Land gained 1.87 percent bucking the broad market, Guangzhou R&F Properties rose 1.35 percent while KWG Property edged up 1.92 percent.

(HK Edition 12/20/2008 page2)

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