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By Robert Trellis
The stocks nosedived in Hong Kong today as the Hang Seng Index erased this year’s gains. The stocks fell as commodity producers slipped on lower oil prices and reports emerged that higher interest rates by China slow economic growth.
Nation’s largest oil producer, PetroChina Co., shed 3 percent after announcing an asset purchase, while China Overseas Land & Investment Ltd., which is run by the nation’s construction ministry, went down 3.6 percent after Beijing raised interest rates on February 8. Li & Fung Ltd., the major supplier to Wal-Mart Stores Inc., shed 4.1 percent after Federal Reserve Chairman Ben S. Bernanke yesterday said that the unemployment rate in the US would not come down soon. Hong Kong Exchanges & Clearing Ltd., the city’s stock-exchange operator, lost heavily as reports about the merger plans of overseas bourses hit the market.
The Hang Seng Index lots 2 percent to 22,708.62, the lowest close this year. “Fund managers are continuing to move their money from stocks to cash,” said Castor Pang, Hong Kong-based research director at Cinda International Holdings Ltd., to Bloomberg. He added that China’s decision to raise interest rates will affect the consumer industry and it will also affect property and financial stocks in China. It is to be noted these stocks drive the Hang Seng Index.
Aluminum Corp. of China Ltd. lost 2.5 percent to HK$7.34, while Jiangxi Copper Co., China’s biggest producer of the metal, went down 2.8 percent to close the day’s trading at HK$24.10. Crude oil for March delivery lost 0.3 percent to $86.71 a barrel in New York yesterday.
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