US reports spark concern in Hong Kong

HONG Kong stocks fell, poised to end the year 13 percent from their record high in October, after United States reports fueled concern the world's biggest economy will slow.

Li & Fung Ltd, a supplier to Wal-Mart Stores Inc, led declines.

Industrial & Commercial Bank of China Ltd paced a drop among banks after Goldman Sachs predicted financial firms would make more writedowns on subprime-linked securities losses, Bloomberg News said.

"A slowdown in the US is very likely to happen," said Renault Kam, of Atlantis Investment Management Ltd in Hong Kong. "Exporters, especially those relying on the US, will be affected most."

The Hang Seng Index lost 472.33 points, or 1.7 percent, to close at 27,370.60, adding to yesterday's one percent decline.

The measure's two-month retreat from the record has pared gains for the year to 37 percent, still the best annual performance since 1999. Investors clamoring for access to China mainland's economic growth have created the world's biggest oil company, phone company and bank on the city's exchange this year.

Thirty-eight stocks declined while four advanced. Hang Seng December futures dropped 1.1 percent to 27,491. The Hang Seng China Enterprises Index, which tracks 43 "H shares" of Chinese companies fell 2.2 percent to 15,991.48.

Turnover, including equities traded on the main board, stocks, warrants and bonds, was HK$78.2 billion (US$10 billion) compared with the daily average of HK$135 billion this quarter.

Li & Fung, which had 72 percent of its revenue from the US last year, slid 90 cents, or 2.8 percent, to HK$31.80, its biggest decline since December 17.

Foxconn International Holdings Ltd, the world's largest contract maker of mobile phones, lost 44 cents, or 2.5 percent, to HK$17.12. Foxconn generated 24 percent of its sales from the US last year.

The stock is the worst performing member of the Hang Seng this year, declining 33 percent after doubling in 2006.

ICBC fell 13 cents, or 2.3 percent, to HK$5.55. China Construction Bank Corp, the second biggest, dropped 17 cents, or 2.5 percent, to HK$6.56. HSBC Holdings Plc, which made a third of its revenue in North America last year, lost 60 cents, 0.5 percent, to HK$131.