Shares drop as worries on Spain continue
Updated: 2010-12-16 08:19
(HK Edition)
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Hong Kong shares fell the most in three weeks on Wednesday as losses from profit-taking accelerated after Moody's warned it may downgrade Spain's debt.
The Hang Seng Index (HSI) fell 2 percent to close at 22,975.35, its sharpest drop since November 23. Futures on the gauge slid 1.9 percent to 22,950.
The decline came on still tepid turnover and was led mostly by a sell-off in oil counters and heavily-weighted mainland banking shares.
Giving investors another excuse to book profits made so far this year, ratings agency Moody's said it had put Spain on review for a possible downgrade because of its high funding needs and doubts about its banking sector and regional finances.
The drop in the HSI coincided with a weakening of the Hong Kong dollar, suggesting some capital may be flowing out of Hong Kong as funds close books for the year.
Cathay Pacific Airways Ltd fell 7.2 percent after the International Air Transport Association said combined airline profits may drop 40 percent next year.
Airlines are amongst the worst performers this month after some investors saw China's plans to develop a high-speed rail network hitting profits and as the sector's fast rebound after the financial crisis plateaus.
Oil major PetroChina fell 3.6 percent and Sinopec was down 3 percent as crude prices eased to $87.90 with charts pointing to further losses as a cautious US Federal Reserve dampened expectations for a faster recovery.
Soho China slid 0.8 percent to HK$5.96. Guangzhou R&F Properties Co fell 1.1 percent to HK$10.84. KWG Property Holding Ltd declined 1.1 percent to HK$6.23.
Beijing may introduce extra measures aimed at curbing home-price gains in the city, including ones related to taxes and the availability of credit, China Daily reported Wednesday, citing Xu Zhijun, spokesman for the Beijing Municipal Commission of Housing and Urban-Rural Development.
The Hang Seng China Enterprises Index lost 2.2 percent to 12,585.04.
Bloomberg - Reuters
(HK Edition 12/16/2010 page3)