(**At 3:00 am HK is down 3%, China Up 1%, Japan marginally higher, France down fractionally, Germany down 1% (Germany has a larger exposure to Rusia..), rest of Asia down. Yen is @ 146.7)
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Thursday August 13, 1:50 am Eastern Time
HK stocks end morning sharply lower, hit by HSBC
HONG KONG, Aug 13 (Reuters) - Hong Kong stocks ended the Thursday morning
session at their lowest levels in more than five years as HSBC Holdings (0005.HK)
plummeted on active selling by foreign investors, brokers said.
The blue chip Hang Seng Index dived 274.24 points, or 4.00 percent, to finish the
midsession at 6,585.24.
It had fallen to a session low of 6,581.44, the lowest since April 13, 1993, when it hit 6,286.67.
''Obviously selling orders are focused on HSBC Holdings, which has been downgraded or reweighted by many analysts since
the announcement of its interim results earlier this month,'' said Tony Yung, research director at Tai Fook Securities Co Ltd.
HSBC Holdings lost HK$8.00 to HK$149.00. Shares of the banking giant have fallen HK$40, or 21 percent, this month. It
reported a 14 percent drop in its interim pretax profits on August 3.
Yung said Tai Fook saw HSBC Holdings falling to HK$140.00, but some analysts in other brokerages put their targets at
about HK$120.00.
Concerns about renewed weakness of the Japanese yen and higher Hong Kong interest rates undermined sentiment and fuelled
selling of index heavyweight stocks and index futures, brokers said.
The yen was at 146.85/95 to the U.S. dollar in afternoon trading compared to 146.15/25 in late New York trade overnight.
August Hang Seng Index futures lost 295 points at 6,545 and September contracts fell 220 to 6,640 points.
''It seems that a renewed round of selling off has started and the market is still finding its bottom for the near term,'' Yung said.
Market turnover was HK$3.11 billion compared to HK$3.53 billion at Wednesday's midsession close.
Investors were cautious ahead of the long weekend as there were talks that speculators might use the holiday on Monday to
attack against the Hong Kong dollar, brokers said.
''There is pressure (on the Hong Kong dollar) and there is no reason to buy the market or the major stocks,'' said Stephen
Brown, head of research at Kim Eng Securities.
The Hong Kong dollar stood at HK$7.7490/00 to the U.S. dollar and the overnight interbank rate rose to 7.50-8.25 percent
at midday from its Wednesday close of 6.50-7.00.
Hongkong Electric (0006.HK) lost HK$0.90 to HK$20.80 ahead of its interim results later on Thursday.
Analysts expect the company to post flat growth in profit for the first six months of 1998 with consensus forecast ranging from
HK$1.95 billion to HK$2.05 billion compared to HK$2.09 billion a year earlier.
China plays, depressed by floods in China and the nation's slower economic growth, finished the morning mostly lower.
The red chip Hang Seng China-Affiliated Corporations Index eased 14.80 points, or 2.49 percent, to 579.75 points and the
Hang Seng Chinese Enterprises Index of H-shares lost 2.70 points, or 0.98 percent, at 272.64 points.
-- Alison Leung (852) 2843 6369; Fax (852) 2845 0636
-- Email: hongkong.newsroom@reuters.com
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