Business

Editor: bruce
1 Sep 2008 10:07:25 GMT

* Turnover at 18 month low on earnings caution

* China Mobile falls another 2.3 pct, leading losses on HSI

* Lenovo drops percent after Dell warns on tech spending (Updates to close)

HONG KONG, Sept 1 - Hong Kong shares started the new month on a weak note, falling 1.7 percent on persistent worries that company profits were slowing down.

Shares in Chinese PC maker Lenovo Group <0992.HK> tumbled 6.4 percent to its lowest level in 5 months after Dell warned that companies worldwide were cutting technology spending.

Technology stocks across Asia fell after Dell confirmed the industry’s long-standing fears of a demand slowdown. LG Electronics <066570.KS>, the world’s No.4 handset maker, plunged 9.6 percent while Taiwanese electronics gear maker Hon Hai <2317.TW>, dropped 6.9 percent.

“There is plenty of caution ahead of key U.S data including jobs numbers and anticipation for market boosting announcements from China,” said Ben Kwong COO with KGI Asia.

The benchmark Hang Seng Index <.HSI> closed 355.58 points lower at 20,906.31.

Mainboard turnover fell to a dismal HK$41.1 ($5.3 billion) as compared with HK$63.4 billion on Friday.

“The sell-off in the local market seems to nearing an end as most blue-chips are finished with their earnings announcements and the market has a had a chance to factor those in,” said Linus Yip, strategist with First Shanghai Securities.

The blue-chip index tumbled 6.5 percent last month, closing at a 12-month low of 20,392.06 on Aug 21.

Shares in China Mobile <0941.HK>, the world’s largest wireless carrier, fell another 2.3 percent, extending its heavy slide in the last two sessions, as investors continued to worry about the company’s growth prospects in China’s changing telecom landscape.

Fashion brand Esprit Holdings <0330.HK> dropped 6 percent as retail sales in Germany, Esprit’s No.1 market, grew a tiny 0.6 percent in July after falling 3.5 percent in June.

The stock has shed 19 percent in the past two sessions after the company reported lower-than-expected earnings in the first half and cautioned investors about a further slowdown.

Hong Kong-listed arm of Taiwan’s Hon Hai, Foxconn International Holdings <2038.HK>, slipped 4.6 percent on Dell’s comments and worse-than-expected quarterly profits from its parent company.

The China Enterprises Index <.HSCE> of top locally listed mainland Chinese firms fell 1.9 percent.

Top insurer China Life <2628.HK> slid 2 percent, tracking a 3 percent decline on the Shanghai bourse where it has substantial investments.

Air China toppled 6.4 percent as oil prices continued their upward march after energy firms in the U.S gulf shut down all offshore oil output ahead of Hurricane Gustav.

Higher oil prices also send Asia’s largest refiner Sinopec Corp <0386.HK> down 2.9 percent.

Chinese coal miners moved lower on fears of stricter government-imposed price caps on thermal coal.

China Shenhua <1088.HK>, the world’s most valuable coal miner, fell 2.4 percent to HK$26.35 even after posting a 43 percent jump in first-half net profit on Friday. Credit Suisse cut its target price on the stock to HK$35 from HK$41 after factoring in the policy risk on contract coal. Yanzhou Coal <1171.HK> fell 5 percent.

Power equipment manufacturer, Harbin Power <1133.HK>, fell 8.7 percent after Deutsche Bank downgraded the stock to hold from buy on disappointing first half earnings and a warning from the management about severe margin pressure in the second half.