HK Shares end two-month low following global markets

Fears of worsening credit market problems in the United States sent Hong Kong's benchmark index down sharply to a two-month low Thursday, tracking a broad selloff in the region despite a slew of upbeat first-half earnings reports.

The benchmark Hang Seng Index once extended its loss to 940.57 points at most Thursday and finished down 703.30 points at 20,672.39, its lowest level since June 13. Turnover totaled 104.94 billion HK dollars, up sharply from 77.81 billion HK dollars Wednesday.

The index has lost 12 percent of its value since hitting a record closing high of 23,472 points on July 24, nearly wiping out all its gains in the year so far.

All the four major categories lost ground, with the Commerce and Industry dropping most at 3.66 percent, followed by the Finance at 3.29 percent, the Properties at 2.46 percent and the Utilities at 1.62 percent.

Analysts said they expect further weakness in the blue-chip index in coming weeks if the subprime mortgage problems do not subside, though they said the index will have strong support between 20,000 and 20,500.

Among the blue-chip shares, bourse operator Hong Kong Exchanges registered the sharpest drop, with its shares down 8.3 percent at 110.10 HK dollars, despite strong first-half results reported Wednesday.

Strong first-half results for China Mobile did not help boost the market heavyweight, which fell 3.9 percent to 80.85 HK dollars. The mobile phone services operator reported a stronger-than-expected 25 percent rise in net profit on growth in revenue from value-added services and an increase in subscribers.

Chinese banks also fell sharply. China Construction Bank fell 5.3 percent to 5.05 HK dollars and Bank of China lost 3.2 percent to 3.59 HK dollars.

"With the market being so heavily oversold, it's a good time to buy now," said SHK's Pang, adding that he would prefer companies that reported strong first-half results, such as China Mobile, China Life, and Shimao Property.

"It's safer to bet on China-related companies because the buoyant economic fundamentals in China are still intact," he said.