China’s Reserve Ratio Causes Hong Kong Stocks Slump
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Photo Credit: TimeCap
Hong Kong stocks came down dragging the benchmark index to its steepest drop ever in a period of three months, following China’s announcement to the effect that banks should increase reserves, which if ever, would be the fifth time in 2008.
One of the biggest loser recently was Industrial & Commercial Bank of China Ltd., which is China’a largest bank in terms of its market value. The bank’s losses was the most experienced by it in more than four months. Hang Lung Properties Ltd. also fell and led other developers down the losers’ path. Cathay Pacific Airways Ltd., the largest Hong Kong airline, fell heavily in a span of time that exceeds two months after the cutting of its rating to sell by UBS AG.
The Hang Seng Index declined 3.6 percent or 870.25 to 23,531.93, which was the company’s hardest fall counting from March 17. The Hang Seng China Enterprises Index, which tracks mainland Chinese companies’ H shares, plunged 5 percent to 12,835.70, the firm’s biggest loss since April 14.
“Things seem to be worse than expected and general market sentiment is being hit. We tend to favor energy stocks, but avoid oil users given rising oil prices,” according to portfolio manager Nancy Lee, Taifook Asset Management Ltd., Hong Kong.
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