The Hong Kong share market fell 3.61 per cent yesterday, virtually wiping out the week's gains, as discouraging words from United States Federal Reserve chairman Alan Greenspan triggered profit-taking after three days of advances, brokers said. The Hang Seng Index fell 284.11 points to 7,576.57 as turnover dipped to $4.88 billion from $4.97 billion on Wednesday. Mainland-related shares also fell. Brokers said Mr Greenspan's testimony to Congress on Wednesday dampened expectations of an imminent rate cut in the US and other industrialised nations. 'The Greenspan comment on the fact that there was no co-ordinated effort to reduce interest rates worldwide offered a good excuse for profit-taking,' BNP Prime Peregrine managing director Gilbert Wong Kun-kau said. Falling markets elsewhere in Asia, particularly Japan's 2.38 per cent drop on financial sector concerns, also added to pressures in Hong Kong. HSBC lost ground, falling 4.39 per cent to $141.50, a fresh two-year low. ABN Amro Asia sales director Peter Bristowe said: 'I think HSBC has generally been holding up relatively well compared to its global peer group. But the valuations look a little bit stretched on a price-to-book basis and there are a few sells [recommendations] out there.' HSBC has fallen 18.44 per cent - more than any other blue chip - since the Government's last apparent equity purchases on August 28. The Hang Seng Index itself has only fallen 3.23 per cent over the period, held up by red chips Shanghai Industrial and Guangdong Investment, which saw gains of more than 30 per cent each. Shanghai Industrial and other mainland-related shares also came under profit-taking pressure yesterday. Red chips fell 5.73 per cent to 764.4 points and H shares lost 6.59 per cent to 358.04 points, but both sectors remain ahead for the week. Brokers said liquidity would still be stunted barring improving economic numbers or signs of corporate recovery. Sassoon Securities research head Vivian Kwok said: 'Investors generally are not tempted to return until they see stronger signals of stability in terms of the economy and the regulatory system.' After the market closed, the Government announced that unemployment in the three months to September rose to 5 per cent from 4.8 per cent in the preceding three-month period. Questions still remain over whether the Government will stick to new regulations on settlement clearing and short selling, which have raised protests among brokers. On the bright side, Ms Kwok said the Government's measures to reduce interest rate volatility had been moderately effective. 'We are seeing stability return to the interbank market but we still need to see banks replenish Hong Kong dollar deposits,' she said. Lower interbank rates were no help to the property sector yesterday, with the sub-index falling 4.62 per cent.
