Analysts say return to order may need more than US$700b
Hong Kong stocks dropped the most in a week yesterday as skittish investors quit the market amid mounting speculation that the massive United States bailout plan may not be enough to contain the global credit crunch.
The Hang Seng Index tracked Wall Street's losses on Monday, sliding 759.35 points or 3.87 per cent to 18,872.85. All but one of the benchmark's 43 blue chips finished down on the day.
The Dow Jones Industrial Average rebounded yesterday in midday trade after falling 3.27 per cent on Monday. It was up 23.42 points or 0.21 per cent. The S&P 500 Index rose 0.11 point or 0.01 per cent and the Nasdaq Composite Index added 5.93 points or 0.27 per cent.
European markets traded lower, with London's FTSE 100 Index down 1.91 per cent at the close and Frankfurt's Dax Index finishing 0.64 per cent weaker.
'The US government rescue plan is controversial,' said Chan Yuk-keung, a fund manager at Phillip Asset Management. 'Nobody knows whether a US$700 billion bailout is enough to restore the economy back to normal or not.'
Japanese investment guru Kenichi Ohmae said yesterday the US plan to buy back bad assets weighing down the financial system was not comprehensive enough to significantly improve market sentiment.
