Hong Kong and China shares fell, with the Hang Seng index posting their worst one-day decline since the 2008 financial crisis on Friday, with more losses seen as investors cut positions in cyclicals in a global sell off. Fears of a worsening crisis in Europe and stalling growth across the West combined to sink the Hang Seng Index to a 10-month low with the high beta stocks among the highest percentage losers among benchmark components.
"I doubt we are seeing a repeat of the '08 crisis," said Eng Teck Tan, a Singapore-based investment manager with Treasury Asia Asset Management. The Hang Seng Index finished down 4.3 percent at 20,946.1 points, the lowest since September 1, 2010, while turnover at HK$125 billion was at its highest since November.
The benchmark index fell below consecutive chart supports, first at its 2011 low at around 21,508, then at its June 2010 high around 20,957. Its next support is seen at its August 2010 low near 20,370. Cyclicals were hit particularly hard. The Hang Seng Composite Index for Materials was down 5.5 percent with Citic Pacific, the top beta play among Hang Seng components, the biggest percentage loser on the benchmark with its 8.1 percent decline.
Hutchison Whampoa Ltd lost 8.3 percent, erasing gains from the last three weeks in the run up to its first-half earnings results on Thursday that fell short of analysts' forecasts as its 3G business, expected to be a key driver of growth going forward, struggled.
In China, the Shanghai Composite Index finished down 2.2 percent at 2,626.4 points, tracking the slump in global equities and extending its weekly losing streak into a third straight week. A-share turnover reached its highest this week as the Shanghai benchmark bounced off its lowest levels in 10 months before closing above the lows in June 2011, which has supported the index for much of the last two weeks.
On a weak day across Asia, the Shanghai market was a relative outperformer. Losses on Friday so far plunged the Shanghai benchmark further into oversold territory on the charts with its relative strength index value hitting its lowest since end May. PetroChina Co Ltd's nearly 2.6 percent decline on the day brought it to 10.2 yuan, its lowest since October last year. At 10.3 yuan, the stock is about 5 percent off its all-time lows recorded during the 2008 financial crisis.