Hong Kong, China shares extend slide on global economy fears

Hong Kong shares fell for a fifth consecutive session on Monday, dragged lower by financial and property stocks after Chinese Vice-Premier Wang Qishan warned the global economy is in a grim state, further dampening sentiment.
Turnover shrank to its lowest in a month, while continued interest in defensive sectors such as Chinese telcos and utilities, which have outperformed the market in 2011 to date, suggested risk-averse investors were willing to pay a premium for safety.
The Hang Seng Index fell 1.4% to about 18,226 points as Wang's bearish outlook added to worries about global fallout from Europe's deepening debt crisis.
Financials were a clear drag on worries that slowing global growth will reduce profitability and produce more problem loans, with Industrial and Commercial Bank of China (ICBC) sliding 3.2% and the financial sub-index down 1.7%.
The Shanghai Composite Index closed down 0.1 percent at 2,415, marking its fourth straight session in the red.
However, the Hang Seng managed to hold above the 50% Fibonacci retracement of its rise from the low on Oct. 4 to the high on Oct. 28. It earlier tested the bottom of a chart gap that formed between the high of Oct. 21 at about 18,082 and the low of Oct. 24 at about 18,435.
Chinese property developers led losses on Monday, after outpacing gains in the broader market in October. Longfor Properties Co Ltd lost 5.4% in twice its 30-day average volume.
"What is common among the property stocks that have been hit the hardest this month is that they are regarded as the high quality stocks, with higher valuations relative to their peers," said Lee Wee-Liat, regional property head at Samsung Securities.
Longfor is trading near historic lows, at 6.1 times its forward 12-month earnings, according to Thomson Reuters Starmine data. This compares to the 3.2 times for its peer, Evergrande Real Estate Group, which finished almost flat on the day.
Longfor was further hit by market chatter that the company sold apartments at a Beijing development over the weekend at prices that were below cost, according to Samsung's Lee.
In a note on Monday, Credit Suisse analysts said consensus estimates for mainland developers were still too optimistic despite a reduction in the last few weeks, and maintained their underweight rating on the sector.
"The magnitude and duration of the current sector downturn should be more than in 2008," they wrote in the report, adding that listed property companies were heavily exposed to regions that saw the biggest price declines in the physical market such as the Yangtze River Delta, Bohai Rim and Chongqing.