* HK shares fall on worries over global economy * HSBC slides on bad loan concerns * Local developers drop on bleak outlook
(Updates to close)
By Jun Ebias
HONG KONG, Nov 11 (Reuters) - Hong Kong shares slid 4.8 percent on Tuesday, weighed down by banks on concerns the global economic downturn will increase bad loans, while local developers dropped as the outlook for the property sector dimmed.
Hong Kong developers Cheung Kong (Holdings) (0001.HK: Quote, Profile, Research, Stock Buzz), controlled by billionaire Li Ka shing, plunged 9.2 percent, while Sun Hung Kai Properties (0016.HK: Quote, Profile, Research, Stock Buzz) shed 5 percent.
"The market is pricing in the likelihood of a continued drop in property prices. The potential rise in the unemployment rate will depress demand further," said D. Gorton, analyst at Louis Capital Markets (Hong Kong).
Hong Kong's home prices are expected to fall 15 percent in 2009, while rents may decline 10 percent, Nomura International (HK) said in a research report on Tuesday.
HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz)(0005.HK: Quote, Profile, Research, Stock Buzz) shed 4.7 percent to HK$88 after it said on Monday that it took a $4.3 billion hit for bad debts in the United States, up $700 million from the previous quarter. [ID:nLA296008]
JP Morgan cut HSBC's price target 25 percent to HK$82.
"The results of HSBC were discouraging. The big worry is that its U.S. operations will continue to deteriorate and they will have to set aside more funds to cover bad loans in the future," said Y.K. Lee, an analyst at Core-Pacific Yamaichi.
Shares of Semiconductor Manufacturing International Corp (SMIC) (SMI.N: Quote, Profile, Research, Stock Buzz)(0981.HK: Quote, Profile, Research, Stock Buzz), China's top contract chip maker, soared 29 percent. The stock earlier rose as much as 61 percent in its biggest one-percentage gain ever after it said it planned to sell a $172 million stake to Beijing-based Datang Telecom Technology & Industry Holdings Co Ltd. [ID:nHKG152167]
The benchmark Hang Seng Index .HSI closed down 703.73 points at 14,040.90, snapping a two-day 7 percent rally.
A total of HK$54.4 billion ($7 billion) changed hands, down from HK$60.7 billion on Monday.
Standard Chartered Bank (2888.HK: Quote, Profile, Research, Stock Buzz) fell 6.5 percent after it said on Monday its local subsidiary in Brazil had agreed to acquire some fixed assets from Lehman Brothers Brazil. [ID:nWLB3205]
The China Enterprise Index .HSCE of top locally listed mainland Chinese companies fell 3.7 percent to 7,136.92, led by a 5.8 percent slide in the nation's top insurer, China Life Insurance (2628.HK: Quote, Profile, Research, Stock Buzz).
Chinese banks and construction-related stocks gave up earlier gains as investors were sceptical about their earnings prospects with the slowing mainland economy.
Top lender ICBC (1398.HK: Quote, Profile, Research, Stock Buzz) lost 2.3 percent, while smaller rival China Construction Bank (0939.HK: Quote, Profile, Research, Stock Buzz) fell 3.7 percent.
The world's No. 3 alumina producer Chalco 2600.HK) fell 2.6 percent, while cement maker Anhui Conch <0914.hk>
Shares of Lenovo (0992.HK: Quote, Profile, Research, Stock Buzz), the world's No. 4 PC maker, fell 7.8 percent after Credit Suisse cut its earnings forecast for the company by 58 percent and 48 percent for 2009 and 2010, respectively, due mainly to slow corporate demand. The stock hit a nine-year low on Monday after Morgan Stanely downgraded the company. [ID:nLA296008]
Hong Kong-based consumer goods exporter Li & Fung (0494.HK: Quote, Profile, Research, Stock Buzz) slid 12.5 percent after it said at the weekend it had imposed a hiring freeze and would lay off some employees, among other cost-cutting measures.
Shanghai Electric Group (2727.HK: Quote, Profile, Research, Stock Buzz) rose 9.4 percent. The company said late on Monday it had received official approval from regulators for its planned A share sale and merger proposal.
(Editing by Anne Marie Roantree)
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