HK Stocks Cose Lower Before Lunar New Year

Profit-taking in financial companies and profit warnings from resources firms dragged Hong Kong shares lower Friday, but index heavyweight HSBC helped narrow losses on the last trading day before the lunar new year holiday.

The Hang Seng Index fell 79.39 points, or 0.6 percent, to 12, 578.60 after trading between 12,469.84 and 12,734.80 during the session.

Turnover fell to HK$33.73 billion ($4.35 billion) from HK$35.38 billion on Thursday.

Traders said investors were reluctant to hold stocks over the Chinese New Year holiday, when overseas markets will still be open. The local market will be closed from Jan 26 to Jan 28.

HSBC extended its rebound from Thursday after falling 26 percent in eight consecutive sessions. HSBC ended up 0.8 percent at HK$57.45 after being hammered by concerns it may need to raise additional funds because of the financial crisis.

Investors took a profit in other financial firms. Hang Seng Bank fell 1.6 percent to HK$85.20 and Bank of East Asia fell 4.3 percent to HK$14.58.

Property heavyweight Cheung Kong also weighed on the market, ending down 1.3 percent at HK$67.65.

Some companies that issued profit warnings ended lower. Sinopec fell 1.6 percent to HK$4.18, but off its early low of HK$4.10, after it said it expects its 2008 net profit to fall more than 50 percent on high crude prices and low chemical product prices in the Chinese mainland. Goldman Sachs said Sinopec's profit warning has negative implications for PetroChina, China's largest listed oil company by capacity. It fell 3 percent to HK$5.58.

Chinese alumina and aluminum producer Chalco fell 3 percent to HK$3.20 after it said its 2008 net profit may fall more than 50 percent from 2007's 10.24 billion yuan ($1.50 billion) on weak demand from the property and auto sectors coupled with high energy costs.

Coal producer Yanzhou Coal fell 5.8 percent to HK$4.90.