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Hong Kong shares lose more than 5 pct for 2nd week; HSBC tumbles

Source : REUTERS
Last Updated: Fri, May 18, 2012 09:30 hrs

(Updates to close)

* HSI slips 1.3 pct on day, 5.1 pct for the week

* CSI300 sheds 1.5 pct, has weekly drop of 2.4 pct

* Anta slammed after warning of decline in orders

* China developers weak on doused easing expectations

By Clement Tan

HONG KONG, May 18 (Reuters) - Hong Kong shares slid another 1.3 percent on Friday, inflicting a second consecutive weekly loss of more than 5 percent as escalating Europe woes dragged down financial stocks and underwhelming U.S. economic data increased risk aversion.

The Hang Seng Index, which shed 5.3 percent last week, lost another 5.1 percent this one - producing the worst two-week period since September.

Mainland Chinese markets were also weaker and finished a second consecutive week in the red after officials doused easing expectations on the pivotal property sector in China despite data showing home prices declined for a second-straight month.

Shanghai bourse volume was some 11 percent below its 20-day average, while in Hong Kong, was average and some way off the heightened levels seen in the sell off last year.

Strength in some defensive stocks in Hong Kong further pointed to caution, but helped the Hang Seng cut losses on the day, finishing at 18,951.9, near the day's highs after bouncing off chart support seen at 18,575-18,627, a range that was strong support in December.

The China Enterprises Index of the top Chinese listings in Hong Kong shed 1.3 percent on Friday and 5.6 percent for the week. The retreat took the China Enterprises Index into the red for the year, down 3.6 percent.

Its mainland peers, the CSI300 Index and Shanghai Composite Index are up 9.7 and 6.6 percent, respectively, in 2012.

On Friday, the CSI300 Index lost 1.5 percent, while the Shanghai Composite slipped 1.4 percent, taking their weekly losses to 2.4 and 2.1 percent respectively.

"Markets are nervous. Things might be starting to look similar to last May on the charts, but the tone is quite different now," said Tan Eng-Teck, a Singapore-based investment manager at Treasury Asia Asset Management.

"Then, we were still in tightening mode and people were telling you to buy. But right now, they will tell you to sell. The risks from the European situation are well-known and will probably get worse," he added.

HSBC Holdings, Europe's largest bank, tumbled 3.1 percent to HK$63.75, its lowest close since Jan. 19 and slipping below its 200-day moving average, currently at about HK$65.64, for the first time in a month.

With the stock the biggest weight on the Hang Seng benchmark, further weakness could lie in wait.

Europe-focused retailer Esprit Holdings slumped 4.1 percent to hit its lowest since early February in strong volume. Esprit still ranks among the year's top performers among Hang Seng Index components, climbing 25 percent.

Anta Sports Products Ltd plunged 9.2 percent on Friday to HK$6 in more than four times its 30-day average volume after the Chinese sportswear brand warned that orders taken for the fourth quarter of 2012 fell by more than 10 percent in value terms year-on-year as competition intensified.

Credit Suisse analysts downgraded their earnings per share estimates for Anta by more than 10 percent to HK$5.70 while maintaining their "underperform" rating on the stock, saying they expect the company to face greater margin pressure.

PROPERTY SOURS CHINA OUTLOOK FURTHER

Chinese developers were hit after data on Friday showed home prices in China fell for a second month in April compared with year-ago levels, as downtrend takes hold in the market while the government has vowed to continue its more than two-year campaign to make housing more affordable.

Late on Thursday, China's housing ministry said it will stick to its stance of curbing speculative property demand while supporting purchases for home use, dashing hopes of policy relaxation.

Sentiment was further soured on Friday by an announcement late on Thursday that China's state-owned companies reported an 8.6 percent profit decline in the first four months compared with a year earlier, another impact of the slowdown in the world's second-biggest economy.

Investors will be looking to the HSBC China Flash PMI for May, a preliminary survey of manufacturing data activity the world's second-largest economy expected on May 24, for fresh clues on the extent of the slowdown.

In Hong Kong, Evergrande lost 4.2 percent, Agile Property slid 1.4 percent while Hang Seng Index component, China Overseas Land & Investment declined 2.9 percent.

Shanghai-listed Poly Real Estate and Shenzhen-listed China Vanke each shed 1.2 percent.

With property a sizable part of the Chinese economy, Chinese banks, seen barometers of growth, were also weaker. Industrial and Commercial Bank of China (ICBC) lost 0.9 percent in Hong Kong and 1.9 percent in Shanghai. (Editing by Richard Borsuk)



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