Hong Kong Stocks hit 7-month low

Hong Kong stocks hit 7-month low, after JP Morgan Chase's announcement to buy Bear Stearns and the interest cut by the U.S. Federal Reserve.

The benchmark Hang Seng Index closed at 21,085, down 1,152 points or 5.18%, while the China Enterprise Index, which tracks the Hong Kong-listed mainland firms, finished at 11,037 points, down 854 points or 7.18% from the previous trading day. The trading turnover was HK$94.4 billion.

JP Morgan Chase decided to purchase Bear Stearns for US$2 per share, totaling US$236.2 million, a small fraction of what Bear Stearns was worth only several weeks ago. The purchase raised further concern over the economic concession.

The U.S. Federal Reserve announced suddenly to cut the interest rate on its direct loans to banks by 25 basic points, which failed to add investors' confidence in the market.

The blue chips led the downward trend. China Mobile<941> dropped HK$4.9, or 4.56% to HK$102.5, HSBC Holding<5> lost HK$4.8, or 3.91% to HK$118.1, Hutchison Whampoa<13> was down HK$2.1 or 2.96% to HK$68.9, and China Life slipped HK$2.05, or 7.39%, to HK$25.7.

CLP Holdings<2>, the electricity producer, was the only blue chip winner, soaring HK$0.7 or 1.08% to HK$65.3.

The property stocks were also among the loser league, after Hong Kong Monetary Authority (HKMA) announced last Friday that it would raise the interest rate on the new mortgage loans from 2.85% to 3%. Cheung Kong<1> was down 5.67%, Sun Kung Kai<16> down 4.82%, Henderson Land<12> down 3.75% and Sino Land<83> down 10.97% respectively.

Chinese bank also went down on concerns over new credit-tightening measures on the Mainland. ICBC<601398><1398> sunk 5.49%, China Construction Bank<601939><939> was down 6.52%, Bank of China <601988><3988> lost 4.52% and Bank of Communications<601328><1328> plunged 6.72%.

The oil giants, Sinopec<600028><386> and PetroChina<601857><857>, closed sharply lower, amid the rising crude oil prices. PetroChina fell 6.55%, Sinopec 8.08% and CNOOC<883> 7.46% separately.