HONG Kong stocks fell, with the Hang Seng Index slumping the most in three months, after HSBC Holdings Plc said investment banking profit fell amid concern Europe's debt crisis won't be contained.

HSBC, which makes up 15 percent of Hong Kong's benchmark stock index, lost 9.1 percent after setting aside more money for bad loans in the United States. The Industrial and Commercial Bank of China, the world's top lender by market value, fell 8.7 percent after Goldman Sachs Group Inc sold shares in the bank, according to two people with knowledge of the matter. Companies that export to Europe slid as bondholders forced Italy's sovereign-debt yields to euro-era highs overnight.

The Hang Seng Index lost 5.3 percent to 18,963.89 at the close, the biggest drop since August 9, when the measure entered a so-called bear market amid concern Europe's debt crisis and US economic slowdown will stall a global recovery. The index exited the bear market on October 27. Companies in the gauge trade at 10.3 times estimated earnings, down from 14.4 times on December 31, according to Bloomberg News data. The Hang Seng China Enterprises Index of Chinese mainland firms listed in Hong Kong fell 5.7 percent to 10,300.18.

"Global markets in our region today are really unsettled by developments in Europe," said Stephen Halmarick, the Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about US$150 billion, in an interview on Bloomberg Television. "These are very, very dangerous times and unfortunately, I think it's going to get worse before it gets better."

Hong Kong's property market is "cooling," K.C. Chan, the city's acting financial secretary, said on the government's website yesterday.

New World Development Co sank 8 percent to HK$7.23 (93 US cents). Hang Lung Properties Ltd lost 7.1 percent to HK$26.05. Sun Hung Kai Properties Ltd shed 5.7 percent to HK$100.90.

Source:shanghaidaily