Hong Kong Stocks Close Lower Following U.S. Stocks' Plunge

Wall Street's overnight plunge sent Hong Kong's benchmark index falling to its lowest level in nearly two months on Wednesday, with Chinese insurers leading the decline after China Life said its 2008 net profit may fall more than 50 percent.

The Hang Seng Index fell 376.14 points, or 2.9 percent, to 12, 583.63, off an intraday low of 12,439.13. The index's last close below this level was Nov. 24's 12,457.

Turnover rose to 47.67 billion HK dollars (6.15 billion U.S. dollars) from 39.58 billion HK dollars (5.11 billion U.S. dollars) on Tuesday.

Analysts said they expect the Hang Seng Index to trade between 12,500 and 13,000 in light trading the rest of the week, as investors aren't likely to take large positions ahead of the Chinese New Year holiday.

Local markets will be closed Monday to Wednesday. However, analysts said they don't expect a major rebound after the holiday, despite the 20 percent fall in the blue-chip index since the start of the year.

The heavyweight U.K. bank HSBC continued to fall sharply on funding concerns, ending down 4.4 percent at 55.00 HK dollars. HSBC, which investors had earlier viewed as one of the most stable stocks in Hong Kong, has lost 25 percent of its value since the start of the year.

Among other blue chips, Chinese insurers were the day's biggest decliners after China Life said its 2008 net profit may fall more than 50 percent. China Life tumbled 7.5 percent to 20.30 HK dollars. Citigroup said in a report Wednesday that it expects China Life's results to recover in 2009, and said it believed that the insurer should continue to outperform peers given its dominant market share.

China Life's main rival, Ping An Insurance, ended the day down 6.9 percent at 33.00 HK dollars. (1 U.S. dollar = 7.7510 HK dollars)

Source: Xinhua