Hong Kong shares close sharply lower amid global smarket slump - UPDATE |
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Fri, 10 Aug 2007 09:14
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HONG KONG (XFN-ASIA) - Share prices closed sharply lower as fears of a spread of a global credit crisis resulting from the US subprime mortgage problems dominated trading throughout the day.Trade on the local bourse closed earlier than normal due to a typhoon.Analysts said the injection of liquidity by the US Federal Reserve and the European central bank into financial markets to ease credit concerns did not assure some investors, who interpreted the move as an admission of the gravity of the problem.They said weak sentiment in the local market will likely persist next week as investors worry about more selling pressures on Wall Street tonight and its consequent negative impact on the European and Asian markets.The Hang Seng index closed down 646.65 points or 2.88 pct at 21,792.71, off a low of 21,661.05 and a high of 21,860.13. For the week, the index was down 745.73 points or 3.31 pct.Turnover was 65.46 bln hkd.'Today's sharp selloff is due to only one reason, fears that more funds and other investors will get hit by the crisis in the US subprime mortgage market,' said Eugene Law, head of research at Celestial Asia Securities Holdings.'The move by the ECB, the Fed and other central banks did not assure all investors. On the contrary, it sent a negative signal to scores of investors who took the view that the subprime mortgage crisis has spread to the government level, as reflected by the actions taken by central banks,' he said.'The move by major central banks also implied that the subprime mortgage crisis now affects the financial markets in different parts of the world, aside from undermining sentiment in the equity markets,' he said.'Sentiment in the local market was very weak because of fears of a spillover of the US subprime crisis to other parts of the world. And this is precisely the reason why many people sold down stocks today,' he added.He said many investors believe that a BNP Paribas unit, other financial institutions might be affected adversely by their exposure to the US subprime mortgage market.BNP Paribas unit BNP Paribas Investment Partners said yesterday from Paris that it has suspended the calculation of net-asset value on three funds invested in asset-backed securities.BNP said the suspension was due to a 'complete evaporation of liquidity in certain segments of the US securitization market'.The funds -- Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia -- will accept no redemptions or subscriptions until further notice, BNP said.Asset-backed securities or ABS are financial instruments collateralized by cash flows from a pool of underlying assets such as consumer loans and mortgages.jun.concepcion@xfn.comjc/net-xfnjcc/xfnnt/xfnjcc/xfnntCOPYRIGHTCopyright AFX News Limited 2007. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
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Hong Kong shares end morning sharply lower after Wall St slump - UPDATE 