Retailers and exporters bear brunt of selling spree
Retail and export-led stocks were punished yesterday, with department stores, home appliances and jewellery segments posting the biggest falls in an across-the-board sell-off.
Analysts said retail stocks had been resilient in recent market sell-offs but became selling targets for fund managers, although they said the sector's mid to long-term growth prospects were good.
'The retail sector will be the last to be affected by the US or European economy,' said Jerry Peng, an analyst with Guotai Junan Securities.
Peng said the mainland government would increase efforts to boost domestic consumption as the risk of an export slowdown rose in line with a weakening global economy.
Investor worries over the euro-zone credit crisis and the sluggish US economy were reflected in some export-led stocks. Sourcing firm Li & Fung fell 6.08 per cent to HK$12.98, outpacing the blue-chip Hang Seng Index, which dropped 4.85 per cent.
Yue Yuen Industrial (Holdings), which makes sport shoes, slid 4.58 per cent to HK$19.18, and Techtronic Industries, the maker of power tools and vacuum cleaners which counts North America as its largest market, tumbled 6.93 per cent to HK$6.04.
The electrical appliances industry was also hit hard after the central government said it would end the 'home appliances to the countryside' scheme in November. The scheme offers subsidies to farmers and encourages them to buy washing machines, refrigerators and televisions.
The government announcement triggered fears of a sales decline in home-appliance-related companies.
Gome Electrical Appliances Holding, the country's second-largest home appliance chain, fell 8.99 per cent to HK$2.53. Skyworth Digital Holdings dropped 9.22 per cent to HK$3.15 and Haier Electronics Group lost 14.58 per cent to HK$5.45.
Forrest Chan, a consumer analyst with CCB International Securities, said the outlook for the companies was negative, adding the mainland government would withdraw cash incentives it had been providing in urban areas since 2009 to encourage people to upgrade home appliances.
Other big losers included jewellery chain retailers. Luk Fook Holdings (International) dived 12.91 per cent to close at HK$26.65 and Chow Sang Sang Holdings International fell 8.61 per cent to HK$18.78.
Mainland department store operators were also sold down. Intime Department Store (Group) slid 10.44 per cent to HK$9.01 while Golden Eagle Retail Group tumbled 10.13 per cent to HK$16.86.