Hang Seng index of H.K. stocks fall 4.38 pc

Asian Economic News, Jan 10, 2000

HONG KONG, Jan. 6 Kyodo

The benchmark Hang Seng Index of Hong Kong stocks dropped 4.38% Thursday following a market tumble Wednesday and the overnight fall on the U.S. Nasdaq composite index.

The index fell 693.49 points to 15,153.23, with turnover valued at 23.11 billion H.K. dollars (about 2.98 billion U.S. dollars).

The sharp decline was the third consecutive loss for the index, which plunged 7.18%, 1,226.10 points, to end at 15,846.72 Wednesday.

Wednesday's point fall was the second largest ever.

Thursday's trading saw a rise of 124.31 points at one point in the early morning, but the index later lost ground and dropped sharply.

In the afternoon, the Hang Seng index was down 1,082.75 points before rebounding toward the close.

Worries over a rise in the U.S. interest rates in February continued to undermine confidence of investors, analysts said.

The sharp fall Wednesday also fueled the bearish sentiment in the market Thursday, they said.

"Individual funds were trying to sell, but there was not much buying in the market. Investors therefore hedged in the futures market and that in turn pulled down the cash market," said Sunny Chan, assistant vice president of research at KGI Asia Ltd.

Alex Wong, research manager of OSK Asia Securities Ltd., said, "The magnitude of Hong Kong's decline is more severe than that of other markets in Asia because the territory's derivatives market is more mature."

The Hong Kong cash market went down also because the Tokyo market failed to react to the overnight rebound of the Dow Jones Industrial Average, Wong said.

Yet the fall in Hong Kong on Thursday was not across-the-board, as China-related shares outperformed blue chips and technology stocks.

Wong said that indicated liquidity is still abundant, but investors did not have confidence in high-tech stocks and blue-chip shares following their previous rallies.

Analysts anticipated there could be a consolidation in the market after the short-term panic selling.

But further corrections are also expected in the near future, especially if the Wall Street continues to fall.