World Bank pessimism sends HK shares to one-month low
Updated: 2009-06-24 07:15
(HK Edition)
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HONG KONG: The benchmark Hang Seng Index retreated 2.9 percent to a one-month low yesterday, after the World Bank's prediction of a deeper global economic contraction prompted a plunge in commodities prices.
The index finished down 521.18 points, or 2.89 percent, at 17,538.37 points yesterday, while the mainboard turnover amounted to HK$66.2 billion.
The China Enterprises Index, which tracks top locally listed mainland stocks, dropped 358.67 points, or 3.4 percent, to 10,280.13 points.
"The three-month rally we've had was quite a long one and now we are headed for a one-and-a-half month correction. The trend is likely to be W-shaped as funds move in and out of risky assets," said KGI Asia chief operating officer Ben Kwong.
The benchmark index has soared 54.8 percent from a more than four-month low reached on March 9 on speculation government stimulus efforts worldwide will revive the global economy.
Shares on the gauge are valued at 15.8 times estimated earnings, up from 10.8 times at the beginning of this year.
The World Bank said yesterday that the global economy will likely contract 2.9 percent this year, compared with a previous estimate of 1.7 percent contraction.
"Unemployment is on the rise, and poverty is set to increase in developing economies, bringing with it a substantial deterioration in conditions for the world's poor," the World Bank said.
While the global economy is set to return to growth in the second half of 2009, a recovery will be subdued, the report added.
With speculation on cutting the reserve ratio, Bank of China fell HK$0.15 or 4.2 percent to HK$3.41 in Hong Kong. Bank of East Asia Ltd slid HK$1.15 or 4.87 percent to HK$22.45, as it was cut to "reduce" from "hold" by Everbright Securities Co.
Manulife Financial was down HK$15.40 or 9.8 percent at HK$141.40. It extended Monday's losses to a one-month low at HK$139.10 after the Canadian insurer received an enforcement notice from the Ontario Securities Commission that found the company had failed to meet certain disclosure obligations.
Asia's largest oil & gas refiner PetroChina slid 4.38 percent to HK$8.08 after crude oil extended its decline toward $67 per barrel. Other commodity stocks were also battered, with the world's No 3 alumina producer Aluminum Corp of China dropping 6.57 percent to HK$7.25.
China Daily - Agencies
(HK Edition 06/24/2009 page4)