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Hong Kong shares drop 4 percent, pushed down by HSBC, strong yen

Hong Kong shares drop 4 percent, pushed down by HSBC, strong yen

Hong Kong shares on Monday plunged to their largest point decline since the Sept. 11 terrorist attacks in America amid worries about the strong yen and expectations for uninspiring earnings by banking giant HSBC.
The Hang Seng Index tumbled 777.13 points, or 4 percent, to 18,664.88. All 36 blue chips closed down in the ninth largest point decline in the market's history.
The last time the index had such a steep fall was on Sept. 12, 2001, when the index shed 923.74 points one day after the U.S. terror attacks.
While traders on Monday warned of further volatility, they also said little had changed in terms of the Hong Kong market's underlying fundamentals.
HSBC fell 2.5 percent ahead of its earnings announcement in London. The share price decline was aggravated by a report over the weekend, saying the lender will write off US$11 billion (euro8.36 billion) to cover mounting losses in its troubled U.S. operation.
Later Monday, the bank said profit rose 5 percent in 2006 despite losses in its U.S. mortgage operation.
"Chances that HSBC will pick up tomorrow are slim, as the overall market is already in downtrend," said Francis Lun, a general manager at Fulbright Securities Ltd. He expects the benchmark index to fall further to 17,800 as soon as by the end of this week.
Heavyweight China Mobile dropped a sharp 6 percent, Hutchison Whampoa fell 3 percent, while China Construction Bank was off 4.9 percent.
Another source of jitters was the yen's rise to a three-month high against the dollar, which prompted traders to dump higher-yielding investments funded by borrowing money at Japan's low interest rates. A decline in this so-called yen-carry trade could hurt global liquidity.
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On the Net:
http://www.hkex.com.hk


Updated : 2021-10-24 17:08 GMT+08:00