The Hong Kong share market tumbled 2.52 per cent to a shaky close below the 10,000-point level yesterday as interbank rates jagged higher and regional markets weakened. The Hang Seng Index fell 254.86 points to finish at 9,841.51, its second close below 10,000 points in the past week. BNP Prime Peregrine Securities institutional sales director Allen Chang said: 'There are rumours that hedge funds are gearing up for another attack on the Hong Kong dollar, so Hibor [Hong Kong interbank offered rate] jacked up to pre-empt that move, and that affected Hong Kong's shares very badly.' Another trader said: 'People are shorting and shorting. I am stumped.' Three-month Hibor rose 50 basis points to a two-month high of 7.75 per cent, while one-month money closed at 7.25 per cent, more than one percentage point up on the day. Indosuez WI Carr Securities sales and trading director Tom Leventhorpe said: 'We have seen some quite extensive selling across the market.' Trading remained thin at $4.97 billion but was up on Monday's $3.61 billion. Brokers said index futures trading dominated cash-market moves. In the morning the May contract hung stoically above the 10,000-point level before falling off sharply in the afternoon. Mr Leventhorpe said that once the futures broke through 10,000 points, stop-losses took the market lower. May futures finished the day 330 points weaker at the day's low of 9,750, a 91.51-point discount to the cash market. Rumours have circulated for several days that a huge open position has developed in the futures market. Interest rate-sensitive property and finance stocks were hard hit by the higher borrowing costs. Cheung Kong finished 4.02 per cent lower at $47.70, while HSBC tumbled 2.76 per cent to settle at $211. HSBC fell through its 200-day moving average for only the second time since October last year, scaring some technically minded punters. HSBC Securities regional technical analyst Chris Roberts played down the significance of the break, saying he attached more significance to the slope of a moving-average curve than breaks from a counter's trading range. Utility stocks outperformed the market for the third straight day, helped by their defensive qualities and a flurry of rumours about Hongkong Telecom. Sources said the telecommunications giant could be close to clinching a US$500 million technical-assistance agreement with the authorities in Shandong province on a mobile telephone project. The deal would boast a 15 per cent guaranteed return, a source said. Mainland-related shares also suffered yesterday, with the red-chip index closing 3.33 per cent lower at 1,264.54 points and the H-share index down 2.91 per cent at 578.01 points. One broker blamed continuing uncertainty over the health of the mainland economy for the falls. KEY FIGURES Close: 9,841.51 (-254.86) Turnover: $4.97 bln Volume: 2.18 bln shares Day's high: 10,130.5 Day's low: 9,819.17 Advanced: 112 Declined: 429 Unchanged: 652 May futures: 9,750 (-330) June futures: 9,755 (-330)
