Hong Kong Stock Index Closes Below 16,000; 1st Time Since 2006

By Hanny Wan

Oct. 8 (Bloomberg) -- Hong Kong stocks fell, sending the benchmark index to close below 16,000 for the first time since June 2006, on concern the credit crisis will topple banks and slowing growth will erode earnings.

HSBC Holdings Plc declined 3.9 percent and Bank of East Asia Ltd. slipped 9.3 percent even after the city's monetary authority cut interest rates by a full percentage point to boost lending. Aluminum Corp. of China Ltd., the country's largest producer of the metal, tumbled 20 percent after saying third-quarter earnings will fall by more than half. Markets resumed trading after a holiday yesterday.

``People are really panicking,'' said Tat Auyeung, a fund manager at Apex Capital Management in Hong Kong, which oversees $800 million. ``Nobody cares about valuations. Right now you have to stay defensive.'' Auyeung gave telecom stocks as examples.

The Hang Seng Index lost 1,372.03, or 8.2 percent, to 15,431.73, its first close below 16,000 since June 29, 2006, and its lowest close since June 14, 2006. The benchmark index has lost more than half its value since its Oct. 30 record close of 31,638.22.


The Hang Seng China Enterprises Index, which tracks so- called H shares of Chinese companies, declined 11 percent to 7,452.74, its worst close since Oct. 27, 2006.

The Hang Seng Index's membership dropped to 42 from 43 following the removal of China Netcom Group Corp. after its $13.2 billion takeover by China Unicom Ltd. Netcom was suspended.

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