BATTERED by what appeared to be the start of a new round of attacks on the region's currencies, Hong Kong shares shed 4.76 per cent last week, closing below the 10,000-point level on Thursday, the first time they have sunk so low since January. But while investor panic in the first round of currency crises last summer sent turnover surging in Hong Kong, in last week's decline turnover remained, as one broker put it, 'ridiculously low'. The market closed on Friday at 10,060.38, recovering from Thursday's 9,971.93 close. Average daily turnover for the week was $5.38 billion. Interbank rates jumped on Thursday following reports that a mainland central banker had predicted the yuan would devalue, news of which translated into a pounding for property stocks. The yuan report misinterpreted the central banker's meaning, Indosuez WI Carr economist Michael Taylor said, but that did not stop the market from seizing on the news. 'The report was wrong - the guy was misquoted - but that's the state of the cycle we're at. People are prepared to believe anything.' On Friday interbank rates receded a bit but the same day Hong Kong Association of Banks announced it would not be lowering rates it offered to customers. Even before riots broke out in Indonesia - leading to renewed attacks on regional currencies by mid-week - the market had been shedding points because of signs of economic stagnation in Hong Kong and the mainland. 'The market has come to accept the reality that economically Hong Kong and China are very slow and the economic pain is just beginning,' Morgan Stanley Dean Witter economist Andy Xie said. In Hong Kong that pain was spelled out last week in a series of depressing headlines: Brokerage collapses and director flees; cutbacks by a leading department store and Hong Kong's flagship airline; economic growth lower than expected; interest rates rise. Economic data showing slower-than-expected growth in the first quarter increased fears the mainland would not meet its full-year growth target of 8 per cent. This, coupled with rumours that a powerful chairman of a red chip company was to be called back to Beijing - market talk later denied - flushed sellers into the market early in the week. However buyers picked through the wreckage in search of good deals; on Friday the H-share and red chip indices closed up 3.10 per cent and 1.73 per cent respectively. Stocks which recovered included China Everbright group - it was their chairman, the influential Zhu Xiaohua, who was erroneously rumoured to have been called back to Beijing. China Everbright gained 2.76 per cent to close at $4.65; it remained, however, down 11.42 per cent last Friday's close.
