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Mainland stocks bring relief to HK shares

(Agencies)
Updated: 2009-03-03 18:59

Hong Kong shares ended 2.3 percent lower on Tuesday after heavyweight HSBC shed nearly a fifth of its value, losing around $17 billion in market capitalization, after the bank announced a rights issue at a deep discount and slashed its dividend.

Related readings:  HK shares end sharply lower on finance sector woes  Hong Kong stocks close 1.61% higher  Hong Kong stocks close lower following US plunge  Hong Kong stocks close lower with plunge of HSBC

But losses on the main index were tempered by gains in mainland counters, including property and metals, as China's top legislature is set to meet later this week amid expectations the central government will expand its 4 trillion yuan, two-year economic stimulus package.

Shares in China Overseas Land shot up 5.2 percent to HK$10.36, on expectations of further rescue measures for China's ailing property market after the sector did not feature in the government's list of top 10 priority industries.

The benchmark Hang Seng Index ended 283.58 points lower, with HSBC alone accounting for a 258 point drop, at 12,033.88, its lowest level since November 2008.

HSBC wrecks havo

HSBC ended down 18.8 percent at HK$46.25 after opening at its lowest level since the 1998 Asian financial crisis, matching a similar sell-down in the bank's London-listed shares.

The UK-lender announced a $17.7 billion rights issue at a deep discount on Monday and slashed its annual dividend.

"I'm still bearish on HSBC. In 2009 we see a major risk for its European business," said Patrick Shum, strategist with Karl Thomson Securities.

"The stock has already been oversold in the short term but the resistance at HK$49 is strong, so there is little room for a rebound."