HONG KONG, January 15: Hong Kong stocks tumbled to a sharply lower close on Thursday triggered by a slide of shares of the Sino Land group and worries about an increase in bad debts following a steep fall in housing prices, analysts said.The blue chip Hang Seng index finished down 647.57 points, or 7.02 per cent, to 8,578.98 after touching a low of 8,471.68 earlier. Turnover was HK$ 9.18 billion against HK$ 11.4 billion on Wednesday.
"Sino Land, which dropped more than 40 per cent, dragged down the market with investors wondering whether the company really has any trouble," said Frederick Tsang, head of research at BNP-PrimeEast Securities (HK) Ltd. Sino Land Co Ltd said after the market closed it knew of no reason for the drop in its share price which lost HK$1.59, or 45.43 percent, to end at HK$1.91.
The company earlier denied rumours that it had defaulted on a loan repayment and said Sino Group was able to pay its loans as they become due and had sufficient working capital.
Analysts said the
banking sector was battered on fears that a possible default on loans by property developers would further dampen earnings of banks. HSBC Holdings lost HK $15.50 to HK$ 160.50 and Hang Seng Bank was down HK$ 6.00 at HK$ 60.50. "Investors are very nervous despite Sino Land's denial and this is a kind of post-Peregrine jitters," Tsang said.
Peregrine Investments collapsed after defaulting on its debts. Peregrine filed for liquidation and its chairman Philip Tose attributed the company's failure to the regional financial turmoil and a meltdown in Indonesian markets.
Percy Au-Young, sales director/greater China, said he was not too pessimistic about the short-term market situation. "The Hang Seng index futures were traded at a premium to the spot index for most of the day," he said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
