Hong Kong blue chips ended lower last week after United States President George W. Bush said 'the game is over' for Iraq leader Saddam Hussein, heightening concerns of a US-led war that may slow global growth.
The US government reported an unexpected 0.2 per cent decline in productivity in the fourth quarter of last year, the first drop since the second quarter of 2001 when the economy was in a recession. This prompted investors to sell shares of exporters. Major exporters, such as Li & Fung, came under pressure as such data signified fears that the US economy - Hong Kong's second-biggest export market - was weak.
The benchmark Hang Seng Index fell 3.27 per cent to 9,150.95 points over the week.
The dour mood reflects investors' nagging worries about the outlook for the economy, soggy corporate profits and the war threat, both in Iraq and North Korea.
What will happen to equity markets if a war breaks out?
In the past, when a war broke out, equity markets rallied almost as soon as hostilities began. Positive equity markets followed.
