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Nevin Nie

Hang Seng Index drops 1,091.42 points on back of US slump
The Hong Kong market  yesterday saw its biggest fall since 2000,  following Friday's slump on Wall Street and on  weakness  in regional markets.
The Hang Seng Index opened 1,128.08 points lower, bounced back to an intraday high of 28,760.55 in late morning trade and then pulled back to about 28,400 as mainland shares tumbled.
The index closed the day 1,091.42 points or 3.7 per cent lower at 28,373.63. It was the biggest fall in point terms since a drop of 1,380.39 points  on April 17, 2000.
The H-share index fell 4.63 per cent to close at 18,808.98 points.
The Shanghai Composite Index closed with a loss of 150.715 points or 2.59 per cent at 5,667.332.
Share markets in Japan, South Korea, Indonesia and the Philippines also fell, with losses ranging from 2.24 to 4.31 per cent.
'It's difficult to say whether the upward trend of the market has changed based on what happened [yesterday],' Philip Asset Management fund manager Chan Yuk-keung said.
'We still have to see whether the market will keep falling in the coming days. I think it was just a normal correction.
'It will only be a matter of time for the Hang Seng Index to break through 30,000 points and it depends on how the US stock markets perform in the coming days.'
On Wall Street, the  Dow Jones Industrial Average fell 2.64 per cent on Friday  on disappointing earnings reports by large companies and rising concerns over worsening credit markets as well as the psychological shadow of the global stock crashes in 1987 and 1997.
The US market dived 22.6 per cent on October 19, 1987,  triggering  declines across the world.
The Hong Kong market dropped 33.33 per cent on October 26 that year and had fallen 41.7 per cent by the end of the month.
Hong Kong suffered  a second market disaster between October 20 and 23, 1997, with a drop of 23 per cent on the Hang Seng Index over the  period.
The 20th anniversary of the 1987 stock plunge cast a  shadow over markets worldwide, according to a report from ICEA, 'though, on the local market, we think any weakness due to overseas subdued sentiment presents buying opportunities'.
The Dow had fallen a further 0.25 per cent by midday yesterday while markets in Europe were seeing losses of up to 2.44 per cent  in late trade.
The value of the Hong Kong market was trimmed to HK$20.98  trillion  yesterday from HK$21.73  trillion on Thursday before Friday's holiday.
'Today was expected but not worse than expected, so the market is much more resilient than we thought. We had a mini-crash  but it was nothing compared with  August 17. It's nothing to get excited about,' said Francis Lun Sheung-nim, a general manager at Fulbright Securities.
The Hang Seng Index fell  for a third day on August 17 to 20,387.13 points, its lowest since May 30,  down from a July 24 peak of 23,472.88.
Market watchers  are maintaining a  positive view on the Hong Kong market on the back of abundant liquidity from the mainland.
'We believe the increasing quota/amount of QDII products coming to the market and its growing popularity among mainland investors ... focuses retail investors' sights on the only viable alternative channel - the Hong Kong market, which is still trading at significant discount to the domestic market,' UBS said.



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