HK shares tank on fears of further China tightening

HK shares tank on fears of further China tightening
Thu Apr 19, 2007

HONG KONG (Reuters) - Hong Kong blue chips sank 2.3 percent and China plays slid 3.2 percent on Thursday amid a broad sell-off as China's latest economic data sparked fears that it would take further steps to cool rapid investment.

Blue chips marked their biggest one-day percentage loss in a month, though a strong euro propped up Esprit Holdings Ltd. (0330.HK: Quote, Profile , Research). Shares in mainland companies listed in Hong Kong suffered their worst one-day percentage decline since March 5, with financial and real estate plays leading the losses.

"The overall trend will remain cautious in the near-term," said Ernie Hon, strategist at ICEA Securities, which released a note predicting another round of tightening measures ahead of China's week-long Labor Day holiday in May.


China's economy in the first quarter grew 11.1 percent from a year earlier, fuelled by rapid investment and booming exports, with a series of recent monetary tightening measures apparently doing little to restrain activity.

Annual consumer price inflation hit 3.3 percent in March, the first time it has gone above 3 percent in more than two years.

(For details, click on ).

"A lot of people are afraid that April is a good time for the government to launch new (tightening) measures, and right now you're looking at CPI, GDP, which are very high," said Desmond Tjiang, fund manager at FORTIS Investment Managers.