Hong Kong falls to three-week low on fears for US economy
The Hang Seng fell sharply today, dropping 2.8 percent to a three-week low, re-opening from yesterday's national holiday, despite news that China's manufacturing sector expanded for the seventh month in a row September to a 17-month high. The mainland markets will remain closed until October 9th.
According to the China Federation of Logistics and Purchasing, the monthly purchasing managers' index (PMI) rose to 54.3 last month - the highest since May 2008 - from August's 54.
In Hong Kong, all nine components of the index were down with consumer goods and consumer services dropping the most at 4.6 and 3.9 percent respectively. The China Enterprises Index, representing mainland companies listed in Hong Kong, fell 2.8 percent to 11,526.32.
The drop follows a plunge on Wall Street as fears for the US economy increase following weak manufacturing and employment data. Li & Fung Ltd. (HKG:0494), the largest supplier of clothes and toys to Wal-Mart stores sunk 4.5 percent.
Resource-related shares made large losses as commodity prices fell overnight. Jiangxi Copper Company Limited (HKG:0358) lost 2.7 percent. Maanshan Iron & Steel Co (HKG:0323) fell 6 percent. Angang Steel Company Limited (HKG:0347). Sinopec (HKG:0386) and PetroChina (HKG:0857) lost 3.3 and 2.6 percent respectively as oil slipped below US$70 a barrel.
Banks also fell. HSBC (HKG:0005) fell 3.8 percent. Industrial and Commercial Bank of China (HKG:1398), the world's largest bank by market value, finished 2.7 percent down. Bank of China (HKG:3988) slipped 2.7 percent.
China announced yesterday that insurance companies will be allowed to invest directly in real estate under new regulations that will stimulate a surge of cash to be pumped into China's property sector. Details on investment limits and what types of property will not be released for at least another month.
Despite the news, today's IPO of Shanghai-based Glorious Property Holdings Ltd (HKG:0845), saw the company's stock price fall 14.8 percent from its IPO price. SOHO China Ltd (HKG: 0410) fell 1 percent. Beijing North Star (HKG:0588) fell 2.6 percent.
Toy-maker and real estate developer RBI Holdings (HK:0566), however, rose 238 percent after saying it would acquire Apollo Precision, a maker of silicon-based thin film photovoltaic modules.
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