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August 22, 2009

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HK stocks dip on clampdown fears

HONG Kong shares dipped 0.6 percent yesterday as fears resurfaced about a likely clampdown on lending by Chinese mainland banks, while shares in China Mobile continued to slide after a disappointing second-quarter performance.

Reports that the mainland's banking regulator may tighten capital rules by excluding subordinated bonds banks sell to other lenders from their capital base triggered selling in mainland bank stocks in Hong Kong.

The China Banking Regulatory Commission has issued a document to lenders seeking feedback on the move, banking sources close to the regulator told Reuters early in August.

"This is old news and the market already responded to this once. But investor confidence has been so shaken by the sell-off earlier this week that every time this news surfaces it's an excuse to sell," said Steven Leung, sales director with UOB Kay Hian.

The Hang Seng Index finished 129.84 points lower at 20,199.02, sliding 3.3 percent for the week.

The China Enterprises Index, which represents top mainland stocks listed in Hong Kong, was down 0.5 percent at 11,464.73.

China Mobile, the world's largest mobile carrier, fell 3.4 percent to end at a four-week closing low yesterday after the telco posted its slowest interim profit growth since its listing. The stock trimmed losses to 3.4 percent by the end of trade.

The company faces a further squeeze on profit margins as competitive pressures intensify and an expensive building of a new, untested 3G network weighs.

China Construction Bank shed 0.9 percent and the Bank of China closed 0.8 percent lower.

China's new bank loans are seen rebounding to about 500 billion yuan (US$73 billion) in August after shrinking to 356 billion yuan in July, although banks would continue to curb lending in the second half, the China Securities Journal said.

Dodging the downdraft, cement maker Anhui Conch jumped 6.3 percent on hopes demand for the construction material is set to improve in the second half of this year, while cement prices are expected to increase.


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