Originally created 08/04/98

Hong Kong market dives before earnings, growth reports



HONG KONG -- The battered stock market nose-dived today on bad news from abroad and expectations of even tougher times at home.

The key Hang Seng index was down almost 379 points, or 4.8 percent, at midday to 7,557.54. The loss followed drops of 3.89 percent last week and more than 4 percent the previous week.

Traders blamed a sharp fall Friday on Wall Street, the weakness of the Japanese yen resulting from uncertainties about the new government of Prime Minister Keizo Obuchi, and concerns about the domestic economy.

Giant HSBC Holdings and its subsidiary Hang Seng Bank were to announce their midyear earnings after the market closed today, and their shares fell sharply in anticipation of poor performance. HSBC accounts for a third of the weight of Hong Kong's benchmark stock index.

Also later today, the government was to announce revised economic growth figures.

The government already has revealed preliminary data that the economy contracted 2 percent in the first quarter of 1998, and has indicated that it expects a further contraction in the second quarter.

Hong Kong withstood much of Asia's financial turmoil in the first months after it began last summer, but now has been dragged down into recession as well. Besides the negative growth, unemployment is at a 15-year high. The economy is being slowed further by cargo problems at the new Chek Lap Kok airport.

Analysts said final figures may show that gross domestic product shrank by 3 percent in the first quarter. If it is much worse than that, they predicted that markets may tumble again on Tuesday.

"Investors are selling on the yen's weakness, and the Dow's fall," said Michael Ng, dealing director at Sassoon Securities.

The dollar hit a seven-week high of 145 yen early today in Asia. The Dow fell 143.66 points on Friday.

The Hang Seng index is nearing its low for the year: 7,462.5, which it reached in mid-June.