Hong Kong shares slumped 5.5 percent on Friday after the $14-billion auto industry bailout was spurned by the US Senate.

The biggest fall in more than a month prompted investors to pull out of the market before weekend with exporters suffering the most.

The benchmark Hang Seng Index (HSI) closed at 14,758.4, down 855.51 points or 5.5 percent after it ended the morning session down 1,079.69 points or 6.9 percent at 14,537.21.

Analysts agree that export-related shares will perform weaker in the market since the global economy is slowing.

"Export market is weak and so its shares. Aviation shares and China Overseas Land were weak as well," Patrick Yiu, an associate director of CASH asset management, said.

"It is hard to predict the market since it seems to have lost its direction at the moment," he added.

Foxconn International, a mobile handset maker, fell 14.2 percent to HK$2.6 on Friday.

Mainboard turnover dropped to HK$58.8 billion from HK$61.4 billion a day earlier.

Shares in mainland automakers slumped as well with Dongfeng Motor, Denway Motor and Brilliance China shedding 9.7 percent, 13 percent and 9.2 percent, respectively.

Some analysts think Friday's fall was reasonable and the HSI is expected to stay at a similar level this week.

"I don't think it caused an impact on the stock market. The US bailout was rejected because the government will have another rescue plan, and just that it may not be in the short-term," Yiu said.

"The fall in Hong Kong market on Friday is just a correction after a few days' surge. I expect the index to stay at 14,200-15,500 points in the coming week," he said.

The China Enterprises Index, comprising top locally listed mainland companies, slumped 6.8 percent to 7,911.76.

Analysts pointed out a drastic slowdown in the mainland's growth for the coming year, dragging down commodity-related shares.

PetroChina, Asia's largest oil and gas producer, dropped 7.6 percent, while CNOOC slipped 6.1 percent.

Local property shares also fell on Friday as analysts advised investors to sell, fearing that residential property prices will slump further.

Sun Hung Kai Properties fell 7 percent while New World Development dropped 11.1 percent.

China Eastern Airlines trimmed losses after a report on the chairman of rival China Southern Airlines was appointed chairman of China Eastern. China Eastern dropped 2.8 percent, after falling 7.5 percent earlier, while China Southern Airlines dipped 7.5 percent.

(HK Edition 12/13/2008 page2)