Hong Kong plunges, financials front region's retreat

By V. Phani Kumar, MarketWatch
Last update: 12:33 a.m. EDT July 8, 2008

HONG KONG (MarketWatch) -- Hong Kong-listed stocks suffered steep losses Tuesday, with market heavyweight HSBC Holdings declining on worries about global credit markets, while Hong Kong Exchanges & Clearing tumbled on concerns lower trading volumes recently that could hurt the exchange operator's earnings.
Financial stocks also fell sharply elsewhere, led by Mitsubishi UFJ Financial Group in Tokyo and Kookmin Bank in Seoul.
"After the drop on Wall Street, people are wary about further write-downs related to subprime mortgages," said Francis Lun, general manager at Fulbright Securities in Hong Kong.

In Hong Kong, the Hang Seng Index skidded 3.3% to 21,200.16 and the Hang Seng China Enterprises Index tumbled 3.7% to 11,275.49, giving up gains from the previous session.
Lun said Monday's rally in Chinese shares in Hong Kong and in Shanghai came on speculation that the mainland government might announce measures aimed at supporting the market. There was "nothing substantial" in those rumors, he added.
China's benchmark Shanghai Composite has lost nearly 47% of its value so far in 2008. After surging 4.6% on Monday, the Shanghai Composite recently rose 0.3% to 2,800.41, but was off the day's high at 2,843.43.
The Nikkei 225 Average lost 1.8% to 13,121.86, giving up more than the 0.9% it added during the previous session to snap out of a 12-session losing streak -- its longest in 54 years. The broader Topix index fell 2.1% to 1,284.47.
Elsewhere in the region, Australia's S&P/ASX 200 slipped 0.5% to 4,978.40, giving up early gains, and New Zealand's NZX 50 index gained 1.1% to 3,154.44. South Korea's Kospi slumped 2.8% to 1,534.55 and Taiwan's Weighted index fell 1.9% to 7,198.64.
In a note to client, Taifook Securities analyst Wilson Wong wrote investors were likely to keenly watch U.S. companies' second quarter reporting season beginning Tuesday. "Market focus will undoubtedly be on the banks and brokerages, which have been severely hurt by the ongoing credit crunch," he added.
Regional detail
Financials fell hard after U.S. banking stocks dropped overnight on worries about credit-related losses. Mitsubishi UFJ dipped 3% and Nomura Holdings Inc. skidded 4.4% in Tokyo and Kookmin Bank tumbled 6.8% in Seoul.
In Hong Kong, market heavyweight HSBC Holdings lost 1.6%, while DBS Group Holdings shed 1.4% in Singapore.
Shares of HKEx tumbled 6% in Hong Kong trading on worries about declining trading volumes over the past few weeks.
Japanese exporters also declined on a strengthened yen, with Sony Corp. losing 3% and Tokyo Electron dropping 1.5%.
In Asian currency trading, the U.S. dollar bought 107.07 yen, compared with 107.58 yen late Monday.
Energy producers and traders also lost ground after crude-oil prices dropped sharply overnight, with shares of Marubeni Corp. gave up 1.9%, while Woodside Petroleum slid 0.8%.
August crude-oil futures, which lost $3.92 to $141.37 a barrel Monday on the New York Mercantile Exchange, recently rose 46 cents to $141.83 in electronic trading, reversing early declines.
Shares of NTT DoCoMo Inc. rose 0.6% in spite of the broad market weakness in Tokyo, on buying a day after the company said it will start selling Blackberry smartphones to individual users in Japan from Aug. 1.
On Wall Street, the Dow Jones Industrial Average lost 56.58 points to 11,231.96 and the Nasdaq Composite gave up 2.06 points to 2,243.32, while the S&P 500 index dropped 10.59 points to 1,252.31. End of Story
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.