Hong Kong stocks open down 7.69%

Written by Chang on Friday, October 10th, 2008

Hong Kong stocks on Friday tracked overnight tumbles on Wall Street to shed 1,225.72 points, or 7.69 percent, to open at 14,717.52, the lowest level for the benchmark Hang Seng Index in three years.

The blue chip index widened its losses once to as much as 8.42 percent shortly after morning open, with heavyweights HSBC Holdings and China Mobile moving down over 6 percent and 7 percent, respectively.

Investors continued to shy away from the market. Local banks, like their counterparts in the United States, have been charging each other high rates for loans, signaling tight credit.

Banks in Hong Kong, including the note issuers, have chosen not to follow the rate cuts announced earlier by the Monetary Authority, the de facto central bank. Joseph Yam, chief executive of the authority, has said it involves a more complicated and therefore potentially slow process for the effect of the rate cuts to be seen.

The Dow Jones industrial average shed 678.91 points, or 7.33 percent, to close below 9,000 for the first time in five years, due to an afternoon sell-off triggered by the potential lowering of the ratings on car General Motors and Ford, among others.

Asian stock markets also fell sharply, with the news of a life insurance company filing for bankruptcy protection adding to the woes in Japan.