HK shares fall as China banks weigh

Hurt by the news that Bank of America was selling a China Construction Bank stake, Hongkong shares fell 0.5 percent on Wednesday. This started concerns of a similar equity sell-down in other lenders.

"Investors are quite bearish about Chinese banks in the first half of 2009 with the central bank expected to cut interest rates further, piling on pressure on earnings," said Patrick Shum, strategist with Karl Thomson Securities.

"And strategic investors will continue to sell their shares as they need the money," he said.

Chinese telecom stocks plunged further after Beijing confirmed it was handing out the long-awaited licenses for next generation mobile networks Wednesday afternoon. China Unicom dropped 5.2 percent after hopes for an imminent issuance of the 3G licenses while China Mobile plunged 1.5 percent.

Blue chips soared

Leaders of blue chip continued to soar as investors gamble US and Chinese stimulation packages would help slow the effect of the worst global recession in decades.

2008’s worst performing Blue chip, Foxconn International Holdings of Taiwan jumped 16.6 percent having total gains of 70 percent the beginning of this year.

Main board turnover was up to HK$43.2 billion as compared with HK$30 billion by midday Tuesday, supporting a 3.2 percent gain in Hong Kong Exchanges & Clearing.

The China Enterprises Index of top locally listed mainland Chinese firms declined 1.5 percent to 8,511.16, weighed down by losses in banking shares. China Construction Bank was down 5.8 percent to HK$4.19 while top lender ICBC lost 5.6 percent to fall to HK$4.03.

Semiconductor Manufacturing International Corp shares increased 7.3 percent after sources said that China's top contract chip maker was on talks of selling a strategic stake to Intel Corp

Future cooperation between the two might include a $2.5 billion chip plant which Intel began building in the northeast Chinese city of Dalian in 2007, the sources told Reuters Tuesday.