HONG KONG (Thomson Financial) - Hong Kong shares finished the morning session sharply lower Friday led by banks and property companies as investors locked in recent gains following the selloff on Wall Street.
US stocks tumbled Thursday on worries about the health of the US economy amid rising oil prices and slower consumer spending. The Dow Jones Industrial Average closed down 362.14 points or 2.6 percent at 13,567.87.
'The market is down in line with the US. After the announcement of the rate cuts, there is no further incentive to push the market higher,' said Kenny Tang, associate director at Tung Tai Securities.
The Hang Seng Index was down 836.80 points or 2.7 percent at 30,656.08, after tumbling to as low as 30,492.31 earlier.
The key index rose 0.5 percent on Thursday as investors cheered the 25 basis point rate cut announced by the Hong Kong Monetary Authority and the Federal Reserve.
'Hong Kong stocks are a bit expensive, so there's bound to be some correction,' Tang said.
The index rose to nearly 32,000 points on Tuesday ahead of the expected rate cut by the Fed and buying by China's fund managers and banks who are allowed to trade in Hong Kong stocks under the qualified domestic institutional investor program.
Lenovo Group, one of the world's largest personal computer makers, bucked the trend. It shares were last up 30 Hong Kong cents or 3.5 percent at 8.85 dollars after it announced solid quarterly earnings.
Lenovo said Thursday its fiscal second-quarter net profit almost tripled as robust demand for personal computers bolstered sales.
'Property companies have had a good run, so there is going to be some profit-taking,' said Howard Gorges, vice chairman at South China Securities.
'This is a healthy correction. We have seen the market struggling above the 31,900 level,' Gorges said. The index will likely settle above 30,000, he said.
Property developers suffered losses even after lenders led by HSBC, BOC (Hong Kong) and Standard Chartered Bank followed the HKMA with a quarter-point reduction on their prime lending rates.
Hong Kong billionaire Li Ka-shing's flagship Cheung Kong (Holdings) fell 8.30 dollars or 5.6 percent to 140.60 dollars.
Sun Hung Kai Properties, Hong Kong's biggest developer, lost 5.70 dollars or 3.9 percent at 140.10 dollars.
Sino Land, which has been buying government properties recently, dropped 75 cents or 3 percent to 23.70 dollars.
Hang Lung Properties was down 1.95 dollars or 5.2 percent at 35.35 dollars. Henderson Land fell 2.95 dollars or 4.3 percent to 66.25 dollars.
Banks were also lower in line with the market.
HSBC, Europe's biggest bank, fell 3.10 dollars or 2 percent to 148.90 dollars.
BOC (Hong Kong), a unit of Bank of China, declined 50 cents or 2.2 percent to 22.15 dollars.
Industrial and Commercial Bank of China, the nation's biggest bank by assets, fell 24 cents or 3.4 percent to 6.88 dollars.
Bank of China, the second-biggest bank, lost 14 cents or 2.7 percent to 5.05 dollars.
China Construction Bank, the No.3 bank, dropped 29 cents or 3.7 percent to 8.34 dollars.
Blue chips China Life Insurance, MTR Corp, Hutchison Whampoa also fell.
China Life, the country's biggest insurer, fell 1.80 dollars or 3.5 percent to 50.45 dollars.
MTR declined 60 cents or 2.3 percent to 25.90 dollars.
Hutchison, the port-to-telecom conglomerate controlled by billionaire Li, was down 3.50 dollars or 3.7 percent to 92.50 dollars.
PetroChina lost 34 cents or 1.7 percent to 19.56 dollars. Asia's biggest oil company said late Thursday it will start trading in Shanghai next Monday after completing its 66.8 billion yuan initial public offering, the country's biggest to-date.
China Mobile lost 3 dollars or 2 percent to 154.50 dollars. Citigroup raised its earnings forecast and price target for China Mobile on expectations Asia's largest mobile phone company will continue to post strong growth in 2008.
The local market may consolidate until next week unless there are positive news such as the much-awaited investments from Chinese citizens under a program that allows them to trade Hong Kong shares directly, said Francis Lun, general manager of Fulbright Securities.
The index has risen to fresh records since the investment program was announced in August, as investors bought shares of Hong Kong-listed mainland companies because they are considered cheaper compared to their counterparts in Shanghai.
(1 US dollar = 7.80 Hong Kong dollars)
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