An investor feels the heat of economic downturn. The benchmark Hang Seng Index ended yesterday's trading at 13,405.85, falling 702.99 points, or 4.98 percent, while the mainboard turnover remained low at HK$38.5 billion. AP

Hong Kong shares failed to sustain their previous five-day rally and tumbled nearly 5 percent yesterday, with mainland financial and property stocks leading the slide, as grim manufacturing data from the US and the mainland triggered fears of a serious global recession.

The benchmark Hang Seng Index (HSI) ended yesterday's trading at 13,405.85, falling 702.99 points, or 4.98 percent, while the mainboard turnover remained low at HK$38.5 billion, dropping from Monday's HK$43.9 billion.

"The performance of the benchmark index is better-than-expected, after a steep slump on the Wall Street," said Patrick Shum, senior analyst at Karl Thomson.

As the mainland turnover remains quite weak, Hong Kong shares are not currently under selling pressure, Shum added. He, however, said the index may encounter a further drop in the near future.

"Market has been expecting the US Federal Reserve or the central government to announce some good news, to boost the benchmark index," Shum said, forecasting the index to fluctuate between 12,000 and 13,500.

Leading the benchmark index fall, Europe's largest bank HSBC Holdings fell 6.4 percent, or HK$5.4, to close at HK$79 yesterday, after advancing almost 9.5 percent in the last six trading days.

"The outlook of HSBC Holdings remains unclear, as market worries the bank's results will be dragged by its provision," Shum said, also predicting the share to move from HK$75 to HK$82.

Property stocks also gained, as HSBC increased its mortgage rate by up to 75 basis points in Hong Kong. Concerns over lending risks have intensified amid the deepening credit crisis.

Local property developer Cheung Kong fell 2.52 percent, or HK$1.8, to HK$69.7, while smaller rival Sino Land nosedived 9.61 percent, or HK$0.59, to HK$5.55.

Sun Hung Kai Properties (SHKP) also shed 5.54 percent, or HK$3.45, to finish at HK$58.8.

The property developer gained 1.47 percent on Monday, as its two new residential projects have received overwhelming response.

Shum said SHKP may perform relatively better than its rivals, as the property stocks remain sluggish amid the gloomy economic situation.

Following the slump in the HSI, the China Enterprise index of Hong Kong-listed mainland companies closed down 5.3 percent at 7,002.48.

Top lender ICBC slid 3.8 percent, or HK$0.15, to HK$3.8, while China Construction Bank dropped 4.21 percent, or HK$0.18, to HK$4.1. China Life, the most actively traded stock, skidded 4.16 percent, or HK$0.85, to HK$19.6.

Redford Securities head of research Kenny Tang said some H-shares may benefit from the central government's 4-trillion-yuan stimulus package.

"Some mainland property and infrastructure stocks are expected to perform better than others in the market," Tang said.

(HK Edition 12/03/2008 page2)