MARKET COMMENT: HSI Down 0.8%; China Tightening Concerns - KGI

0234 GMT [Dow Jones] The HSI is down 0.8% at 22,381.97, as investors fret over China switching to a tightening bias after PBOC governor Zhou Xiaochuan signaled elevated concern over inflation; the index is also weighed by the weakness in Hong Kong developer shares after mortgage rate hikes by local lenders. "China has signaled that its monetary stance is switching from easing to neutral, which in effect means tightening," says Ben Kwong, chief operating officer at KGI Asia. The PBOC is poised to drain funds from the financial system for a fourth straight week this week, as the central bank is offering CNY18 billion of 28-day repurchase agreements, a liquidity-draining tool, in its open market operation Thursday. SHK Properties (0016.HK) falls 3.4% to HK$107.80, New World Development (0017.HK) tumbles 4.3% to HK$13.42 after mortgages rates hikes by HSBC (0005.HK) and Standard Chartered (2888.HK). Market volume is strong at HK$26.92 billion, although inflated by a combined HK$6.04 billion from ASM Pacific (0522.HK) and NagaCorp (3918.HK) due to fund-raising activities. ([e-mail])

 
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