The Hong Kong stock market finished lower for the third consecutive day on Thursday, shedding nearly 650 points or 3.2 percent in that span. It's only going to get worse for the Hang Seng Index on Friday, with analysts suggesting that the market could see losses accelerate and possibly testing the critical support level of 20,000 points.
The global forecast for the Asian markets is decidedly grim after weaker than expected employment numbers out of the United States rekindled fears over the health of the world's largest economy, while some retail numbers also were disappointing. Another retreat in the price of crude oil was virtually ignored in the stampede to the downside, and it also contributed to weakness among some of the commodity plays. That condemned the U.S. markets to a sharply lower finish, and the Asian markets are forecast to follow suit.
The Hang Seng finished modestly lower on Thursday, dragged to the downside by weakness among the metals and mining stocks. The shipping stocks also fell under heavy selling pressure through the session, as did the financials and properties.
For the day, the index lost 195.58 points or 0.95 percent to close at 20,389.48 after trading between 20,356.51 and 20,621.48 on turnover of 56.46 billion Hong Kong dollars.
Among the decliners, China Mobile ended down 2.78 percent, while HSBC lost 0.16 percent, China Life was down 0.35 percent, Hong Kong Exchange & Clearing was down 1.25 percent, CNOOC lost 0.93 percent, PetroChina was down 0.52 percent, Sinopec was down 1.5 percent, Chalco was down 1.08 percent, China Shenhua was down 2.40 percent, Angang Steel lost 3.65 percent, Zhaojin Mining lost 3.17 percent, retailer Esprit was down 2.25 percent, Foxconn lost 3.03 percent, shoemaker Yue Yuen was down 2.80 percent, China Cosco tumbled 6.2 percent, China Shipping Development slumped 5.08 percent, Pacific Basin Shipping was down 2.77 percent, China Communications Construction was down 13.67 percent, China Huiyuan Juice was down 7.68 percent, Cheung Kong was down 0.62 percent, Henderson Land was down 1.27 percent, Sun Hung Kai lost 3.15 percent, ICBC lost 0.19 percent and Bank of Communications was down 0.35 percent.
Finishing higher, Bank of China added 0.91 percent, while China Netcom was up 2.19 percent, China Unicom was up 1.95 percent, Hutchison Whampoa gained 1.21 percent and Kingway Brewery surged 23.5 percent.
Wall Street provides a sharply negative lead as stocks turned in a dismal performance on Thursday after a pair of disappointing employment reports raised concerns about the health of the economy. Sluggish retail sales numbers also gave investors cause for concern, sending the Dow Jones down more than 340 points.
Automatic Data Processing (ADP) set a negative tone before the markets opened when it released its report on employment in the private sector, showing a bigger than expected loss of jobs in August. The ADP report showed that non-farm private sector employment fell by 33,000 jobs in August following a revised increase of 1,000 jobs in July. Economists had expected employment to fall by 30,000 jobs compared to the increase of 9,000 jobs originally reported for the previous month.
Later, the Labor Department said that jobless claims in the week ended August 30 rose to 444,000 from the previous week's revised figure of 429,000. Economists had expected jobless claims to fall to 420,000 from the 425,000 from the originally reported for the previous week. Weakness in the retail sector also made investors jittery after most retailers reported sluggish same store sales for the month of August.
Adding to the negative sentiment, Dallas Federal Reserve Bank President Richard Fisher stood by his gloomy economic forecast Thursday, calling for sluggish economic growth "for some time" into 2009 before the economy gets back on track. He also cautioned that there is a distinct risk that inflation will become embedded and be more than a "one-off" event.
The major averages saw further selling pressure in the final hour of trading, with the Nasdaq ended the session at its intraday low. With the declines, the majors closed at their worst levels in well over a month. The Dow closed down 344.65 points or 3 percent at 11,188.23, the Nasdaq closed down 74.69 points or 3.2 percent at 2,259.04 and the S&P 500 closed down 38.16 points or 3 percent at 1,236.82.
In economic news, China and Singapore have successfully concluded negotiations on a bilateral free trade agreement, Singapore said in a statement on Thursday. The bilateral deal builds on a free trade agreement already reached between China and the 10-member Association of Southeast Asian Nations (ASEAN), to which Singapore belongs. The latest deal covers trade in goods, rules of origin, trade remedies, trade in services, movement of persons, investment, customs procedures, technical barriers to trade, sanitary measures and economic cooperation.
In corporate news, Singapore property giant CapitaLand has sold its indirect wholly-owned subsidiary, Hua Lei Holdings Pte Ltd, for 498 million Singapore dollars, the company said on Thursday. Hua Lei Holdings Pte Ltd indirectly owns 100 per cent of office property, Capital Tower Beijing. The sale of Capital Tower Beijing, which comprises two 35-storey office towers, will yield CapitaLand a gain of 163 million Singapore dollars.
Also, Taiwan's AU Optronics Corp has approved a proposal to invest $20 million for a new subsidiary called BriView Electronics Corp in China. The new unit will make liquid crystal display (LCD)-related products and components, AU said in a filing to the stock exchange.
For comments and feedback: editorial@rttnews.com