Hong Kong stocks plunged 461.65 points, or 3.37 percent, to close at 13,242.96 on Thursday, on concerns of a grim global economic outlook.
Turnover shrank to HK$49.38 billion (US$6.4 billion) from HK$66.23 billion (US$8.54 billion) on Wednesday.
The benchmark Hang Seng Index was hammered by declines in heavyweight HSBC on fund raising concerns and China Mobile over intensifying competition, but bargain hunting in the afternoon helped narrow losses.
Analysts said they expect the HSI to extend losses, because lingering concerns about HSBC's need to raise capital will likely continue to weigh on the benchmark index.
HSBC, the biggest heavyweight on the Hang Seng Index, extended Wednesday's 4.1 percent decline after Morgan Stanley slashed its target price to HK$52 on fund-raising concerns.
The banking giant fell 5.7 percent to HK$66.00, its lowest level since January 23, 1999, when it ended at US$68.67. The decline accounted for 102.38 points of the index's 461.65-point decline.
China Mobile fell 3.3 percent to HK$70.40, due to concerns over intensifying competition in China after the issuance of third-generation mobile licenses Wednesday. CLSA analyst Elinor Leung said 3G operations will result in high costs for telecommunication companies.
"We are cautious on China's telecom sector in 2009 given increasing competition and hefty handset subsidies. All three telcos will likely face earning pressure in the coming one to two years," Leung said in a report Thursday.
Oil companies fell after China said late Wednesday it will cut gasoline and diesel prices 4 percent under the new pricing policy.
PetroChina ended down 5.0 percent at HK$6.22 and Sinopec fell 5.0 percent to HK$4.17.
"With the new pricing policy out of the way, we believe consensus estimates for Sinopec and PetroChina are likely to move down for 2009,' said Credit Suisse.
Bargain hunting in the afternoon helped some blue chips return to positive territory. Bank of China rose 2.6 percent to 1.95 HK dollars, after falling as much as 4.4 percent to HK$1.82 early in the session. Ping An Insurance ended 2.3 percent higher at HK$36.35, rebounding from an intraday low of HK$33.30. (US$1 = HK$7.751)
(Xinhua News Agency January 15, 2009)
