Hang Seng Index follows Nikkei lower following news of raid on internet company Hong Kong stocks suffered their biggest slide in five weeks yesterday as the market followed the slump in Japan. It was the first large-scale correction since the beginning of the year during which time the Hang Seng Index had recorded a 6 per cent gain. Internet company Livedoor, which is listed on the Tokyo Stock Exchange's 'mothers' market' for start-ups, was at the root of yesterday's slump. The company was raided by prosecutors on suspicion of providing misleading information about an acquisition to manipulate its share price. The news triggered a drop of 462.08 points or 2.84 per cent in Japan's benchmark Nikkei-225 Index, with negative sentiment spreading to other Asian markets. The Hang Seng Index fell sharply in afternoon trading to finish near its intraday low at 15,576.2, a drop of 201.52 points or 1.27 per cent - its biggest loss since December 8. Trading was active with shares worth $35.32 billion changing hands, picking up from $27.42 billion on Monday. 'It's time to take a pause, although the market outlook is still positive as a large amount of international funds are sitting in Hong Kong,' said Ricky Cheung, a fund manager at Phillip Asset Management. January index futures contracts closed 210 points lower at 15,603 - 26.8 points above the underlying index. Brokers said this showed investors were still optimistic about the market in the short term. Kenny Tang Sing-hing, an associate director at Tung Tai Securities, said if the market consolidated further, the next support level would be the 10-day moving average at 15,500. Yesterday's correction was broad-based as only five of the 33 blue chips closed unchanged or made advances. China Mobile led the losers, dipping 2.81 per cent to settle at $38. HSBC also saw heavy selling pressure but still managed to close at the critical $130 level, off 0.99 per cent. Hutchison and Cheung Kong, common tools used by sellers to drag down the index, both finished lower. The former finished flat at $77.70 while the latter retreated 2.13 per cent to $82.40. PetroChina, which announced better than expected operating numbers on Monday, dominated the movement of the H-share index yesterday. The mainland's largest oil producer jumped 4.1 per cent right after the market opened, pushing the H-share index to 6,022.09 points - breaking through the psychologically and technically important 6,000 level. However, PetroChina's gain was trimmed during the market slump as the stock ended just 0.69 per cent firmer at $7.30. The H-share index eventually lost ground, finishing down 89.42 points or 1.5 per cent at 5,872.06. Macquarie Securities said in a report that the latest operating numbers from PetroChina showed the company was shifting its focus towards maximising returns rather than a strong emphasis on market share growth and the overall picture of the oil producer was a positive one. The Australian investment bank has set a 12-month price target of $8.60 for PetroChina. Mainland insurance and banking stocks, previously the H-share star performers, were the selling targets yesterday. Bank of Communications and PICC Property and Casualty slid 4.09 per cent and 3 per cent, respectively. Dao Heng Securities recommended short-term investors to take profit on China's banking and insurance counters and switch to the defensive sector such as telecommunications, given that H shares had been generally overbought. Some funds have already shifted to trace laggards with upside potential. Bucking yesterday's trend were retail stocks, which have seen solid performances in the past few days due to expectations of strong tourist inflows over the Lunar New Year. Joyce Boutique soared 10.63 per cent to 52 cents, Bonjour surged 9.52 per cent to $2.30 and Giordano International jumped 7.69 per cent to $4.55.
