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HK stocks fall as China Construction Bank dives
2009-01-07
HONG KONG - Hong Kong's main stock index fell more than 3 percent Wednesday, as shares in China Construction Bank plunged after Bank of America sold part of its stake in the mainland's No. 2 lender. The blue-chip Hang Seng Index sank 522.05 points, or 3.4 percent, to 9,239.24 in its second straight day of losses. Hong Kong had rallied along with other markets in recent weeks amid hopes for a second-half economic rebound, fed in part by stimulus proposals from U.S. President-elect Barack Obama. However, the "Obama effect" could fade as companies report what are expected to be dismal earnings in the coming months, said Peter Lai, investment manager at DBS Vickers in Hong Kong. "After the honeymoon period of Obama wears off, people will realize the cruel reality of the economic slowdown and the credit crisis," Lai said. Bank of America Corp., looking to raise money to cope with economic turmoil, sold a 2.5 percent stake in China Construction Bank for about $2.8 billion Wednesday. The price was HK$3.92 (50.5 U.S. cents) per share, an 11.9 percent discount from Tuesday's closing price. The news sent the Chinese bank's shares down 8.8 percent to HK$4.06 and other banks were dragged down with it. Top lender Industrial & Commercial Bank of China Ltd, or ICBC, fell 7.3 percent to HK$3.96, while Bank of China lost 3.2 percent to HK$2.14. ____ On the Net: Stock Exchange of Hong Kong: http://www.hkex.com.hk
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