A woman looks at a large-screen display showing the closing figures of the Hang Seng Index yesterday in Hong Kong. The HSI fell to a 2-week low despite the central bank's latest rate cuts. China Daily

Hong Kong stocks yesterday declined 2.75 percent to a two-week low. Further market volatility is expected to continue in the remaining days of the year, analysts warned, as some investors locked in profits before holidays while others went for bargain stocks.

The national central bank's rate cut failed to warm the markets; while negative ratings on heavyweight players and weakening US stocks dragged the benchmark Hang Seng Index to shed 401.60 points, or 2.75 percent, and closed at 14,220.79.

"The rate cut didn't come as a nice surprise to the Hong Kong stock market. More ups and downs in the coming days are expected," said Ben Kwong, head of research at KGI Asia.

"As some investors want to lock profits before the holidays, the Hang Seng may drop further and end the year with a level below 14,000 points," Kwong said.

The Hang Seng China Enterprises Index, which tracks Hong Kong-listed mainland companies, lost 5.1 percent to 7,720.02 points.

Stocks worth HK$31.9 billion changed hands yesterday in the slowest trading day since Dec 27, 2006.

HSBC Holdings Plc tumbled 0.4 percent to HK$73.75, extending early losses. Europe's largest bank declined after the credit rating firm, Standard & Poor's (S&P) downgraded the lender's outlook to "negative" on concerns of its fund raising and dismal turnover.

However, the S&P said its ratings on Singapore lender DBS Bank Ltd were not affected by the bank's announcement of its proposed right issue of S$4 billion.

Aluminum Corp of China, also known as Chalco, the country's top producer of the metal, plummeted 9.9 percent to HK$4.08, the steepest decline on the Hang Seng Index.

Hong Kong's largest property developer by market value, Cheung Kong (Holdings) Ltd, fell after local newspapers said the company expects property sales to slow to more than HK$10 billion next year, which is about half of the 2008 sales value.

The developer, owned by tycoon Li Ka-shing, declined 7.6 percent to HK$71.20. Sino Land Co, a Hong Kong- based developer, slumped 6.4 percent to HK$7.80.

CNOOC, China's biggest offshore oil producer, slipped 32 cents, or 4.6 percent, to HK$6.68. PetroChina, the nation's largest oil producer, declined 37 cents, or 5.4 percent, to HK$6.44.

Cathay Pacific Airways Ltd, Hong Kong's largest carrier, fell HK$0.16 , or 1.9 percent, to HK$8.33. Cathay Pacific's first- and business-class sales plunged as the global recession has dampened demand, according to the company.

China Life Insurance, the nation's biggest insurer, dropped HK$0.90, or 3.8 percent, to HK$22.60. American International Group Inc may list its American International Assurance (AIA) unit in Hong Kong after selling a minority stake to strategic investors. China Life is reported to be interested in buying shares in AIA to expand its earnings base outside its home market.

(HK Edition 12/24/2008 page2)