Hong Kong Stocks Tumble on Swine Flu Concern; Airlines Slump

By Hanny Wan

April 27 (Bloomberg) -- Hong Kong stocks fell for the first time in three days, after the Financial Times said Industrial & Commercial Bank of China Ltd. shareholders will sell stock in the company and as swine-flu concern hammered airlines.

ICBC, China’s biggest bank, dropped 4 percent after the FT said Allianz SE and American Express Co. will likely raise more than $2 billion selling shares in the company. Cathay Pacific Airways Ltd., Hong Kong’s largest airline, declined 8.4 percent, halting a 19 percent jump this month through April 24, amid concern an outbreak of swine flu may damp demand for flights. China Yurun Food Group Ltd., the country’s biggest hog processor, slumped as much as 12 percent.

“Airlines are getting hit as they’ve gotten too much ahead while their fundamentals haven’t really changed much,” said Liu Yang, who helps manage $1.8 billion at Atlantis Investment Management Ltd. in Hong Kong. “Transport-related companies will see an impact as well, though this disease is still too far away from Hong Kong.”

The Hang Seng Index declined 449.52, or 3 percent, to 14,809.33 as of 12:11 p.m. local time, halting a two-day, 2.6 percent gain. The Hang Seng China Enterprises Index, which tracks so-called H shares of Chinese companies, slipped 3.5 percent to 8,665.64.

ICBC declined 4 percent to HK$4.10. Allianz and American Express are free to sell half of their ICBC stakes from tomorrow, following the end of lock-in periods, the FT said, citing people familiar with the situation.

Cathay Pacific

Cathay Pacific dropped 8.4 percent to HK$8.38. China Southern Airlines Co., the nation’s biggest carrier, plunged 14 percent to HK$1.89, having rallied 45 percent this month through April 24. Air China Ltd., the country’s largest international carrier, slumped 13 percent to HK$3.48. The stock soared 60 percent this month through April 24.

Yurun sank 8.8 percent to HK$9.14, after plunging as much as 12 percent. The company said it has “stringent product quality control measures to assure food safety.”

China Resources Enterprise Ltd., the government-controlled retailer which has a live hog unit, Ng Fung Hong Ltd., slumped 5.1 percent to HK$12.94.

China Pharmaceutical Group Ltd., a maker of health products, surged 19 percent to HK$4.53.

A growing number of swine flu cases in the U.S. and Mexico prompted the administration of U.S. President Barack Obama to declare a public health emergency and release stockpiles of medicine. New illnesses also were confirmed in Canada and suspected in Brazil, Europe and New Zealand.

In 2003, an outbreak of severe acute respiratory syndrome killed 774 people and infected 8,098 globally.

The Hang Seng Index on April 25, 2003, closed at its lowest in more than four years as the spread of SARS disrupted travel, tourism and trade across Asia. Hong Kong’s economy tipped into recession in the first half of the year.

All but one stock on the 42-member Hang Seng Index declined. April futures slipped 3.2 percent to 14,888.

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