Hong Kong Stocks Drop Most in Week; Esprit, China Mobile Fall

By Hanny Wan

Aug. 28 (Bloomberg) -- Hong Kong stocks fell the most in a week, led by phone companies and clothing retailers, on concern increased competition will erode earnings at China Mobile Ltd. and after Esprit Holdings Ltd. reported slowing profit growth.

China Mobile, the world's biggest phone company by market value, tumbled 6.3 percent after JPMorgan Chase & Co. cut its recommendation on the stock. China Unicom Ltd., the nation's No. 2 wireless operator, slumped 7.3 percent. Retailer Esprit plunged 18 percent, the most in a decade, as at least three brokerages lowered their ratings on the shares after net income grew the slowest in six years. PetroChina Co. fell 3.3 percent after refining losses and taxes dented profit.

``Downside risks remain in place as the bottom line of manufacturers is weak,'' said Renault Kam, a senior portfolio manager at Atlantis Investment Management in Hong Kong, which oversees $5 billion. ``The pressure on retail is big.''

The Hang Seng Index lost 492.43, or 2.3 percent, to close at 20,972.29, its biggest drop since Aug. 21. The Hang Seng China Enterprises Index, which tracks so-called H shares of Chinese companies, retreated 2.4 percent to 11,497.68.

To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net.