HONG KONG: HK shares ended lower yesterday after last week's strong performance, as market sentiment was dampened by reports that new loans at China's four biggest commercial banks dropped to the lowest monthly level this year, raising concern economic growth is slowing.

According to mainland financial media Caijing, which cited industrial sources, China's four biggest commercial banks extended new loans of about 110 billion yuan ($16 billion) in September, the lowest monthly figure in 2009. How much of the decline was due to sagging demand and what proportion to tightening of credit is unclear.

The benchmark Hang Seng Index fell 0.9 percent to close at 21,299.35, with only 2 of its 42 stocks advancing. Turnover was down at HK$44.18 billion ($5.7 billion) from Friday's HK$62.2 billion.

The market climbed as much as 0.6 percent in the morning, led by mainland banks, after China's $300 billion sovereign wealth fund said it will continue increasing its stakes in the nation's three biggest lenders.

However, China Construction Bank ended the day down HK$0.03 (0.46%) to close at HK$6.5. ICBC fell HK$0.02 (0.33%) to HK$6.09, while Bank of China lost HK$0.03 (0.7%) to close at HK$4.26.

Nonetheless, CITIC Bank bucked the trend, rising$0.08 (1.48%) to HK$5.47.

Tsingtao Brewery, China's second-biggest beer maker by volume, advanced 3.4 percent to HK$31.85. The company said its profit for the first nine months of this year may have increased by as much as 85 percent from a year earlier.

"Money is lacking a sense of direction," said Castor Pang, a research director at CINDA International Holdings. "There isn't much good news coming out on the China front."

Angang Steel, the biggest Hong Kong-listed mainland steel maker by market value, dropped 3 percent to HK$14.80. Maanshan Iron & Steel Co slid 2.3 percent to HK$4.72.

China's steel exports to the US dropped by 73 percent this year to August, and shipments to the European Union declined by 85 percent, said Wu Xichun, a consultant to the China Iron & Steel Association.

Some traders in Hong Kong started discounting expectations for positive Chinese economic data due out later this week, and began focusing on third-quarter company earnings.

"The market will be watching out for the release of some earnings in the US overnight, such as Intel, Johnson & Johnson," said Linus Yip, strategist at First Shanghai Securities.

"Investors here will take their cue from the early trend in those figures and act on related or similar stocks that are listed here in Hong Kong," he said.

The Hong Kong benchmark measure rose 5.5 percent in the previous five days and has rallied 88 percent from a four-month low on March 9.

The average price of stocks on the index has risen to 17 times estimated earnings from 11 times at the start of the year. The Hang Seng China Enterprises Index, which tracks the H-shares of Chinese companies, declined 1 percent to 12,375.93.

China Daily/Agencies

(HK Edition 10/13/2009 page4)