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Hang Seng index sees biggest drop in 5 years

By Lillian Liu (China Daily)
Updated: 2006-11-29 08:37

HONG KONG: After months of a bull run that has seen records set one after another, the stock market dived nearly 3 per cent yesterday in the steepest one-day drop in more than five years.

The benchmark Hang Seng Index lost 564.48 points to end at 18639.53, dragged down by such heavyweights as China Mobile, which dropped HK$2.80 to close at HK$64.50, and HSBC Holdings Plc, which dropped HK$2.60 to HK$142.80.

The index plummeted 923.74 points, or 8.9 per cent, to 9493.62 points on September 12, 2001, a day after the terror attacks in the United States.

"All of November's gains have been wiped out in one session," said Andrew Clarke, a trader at SG Securities. "But I don't think it is a major disaster. I think it is one of those things when everything comes at once."

The selling was a combination of hedge funds booking profits at the end of November to switch into Japan, along with fears that guidance from retail giant Wal-Mart signalled a slowdown in US growth, added Clarke.

"Though a bit shocking, it is a healthy correction," said Casor Pang, with Hong Kong-based Sun Hung Kai Financial Group.

"The market has amassed too many gains in the previous months. It might tumble further in the next few weeks before consolidating by the year-end," Pang told China Daily.

Francis Lun, general manager of Fulbright Securities, agreed.

"Hong Kong has been overbought for some time so the time is ripe for some consolidation," he said.

The index had risen about 27 per cent from a mid-June low of 15200 to a recent record high of 19404.01 points.
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(For more biz stories, please visit Industry Updates)



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