Hong Kong's Stocks Decline; Mengniu Dairy Plunges by Record

By Hanny Wan

Sept. 23 (Bloomberg) -- Hong Kong stocks fell for the first time in three days on concern the U.S. government's plan to buy financial companies' bad mortgage assets will fail to prevent a recession and after oil jumped by a record.

HSBC Holdings Plc, Europe's biggest bank, retreated 2.1 percent. China Mengniu Dairy Co., the country's No. 1 milk producer, plunged by a record 60 percent after its products were found to contain an industrial chemical linked to at least four infant deaths. Air China Ltd., the nation's largest international carrier, declined 5.4 percent.

``The plan helped sentiment but there isn't really that much that a government can do,'' said Renault Kam, a senior portfolio manager at Atlantis Investment Management in Hong Kong, which oversees $5 billion. ``A lot of funds aren't fully invested right now; their current cash levels tend to be higher than they normally are.''

The Hang Seng Index lost 759.35, or 3.9 percent, to close at 18,872.85. The Hang Seng China Enterprises Index, which tracks so-called H shares of Chinese companies, plunged 5.1 percent to 9,704.50.

The Hang Seng Index surged 11 percent in the past two days after the U.S.' $700-billion rescue plan for banks eased concern more companies will follow Lehman Brothers Holdings Inc. into bankruptcy.

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