HK stocks fall nearly 4 pct amid corporate gloom

HONG KONG — Hong Kong's main stock dropped nearly 4 percent Thursday as heavy selling in Chinese banks and computer maker Lenovo Group weighed on the market.

The blue-chip Hang Seng Index fell 571.55 points, or 3.8 percent, to 14,415.91.

After a stretch of gains over the New Year, Hong Kong stocks have been hit by selling in the last three sessions.

"The economic reality is sinking in for investors and 'the hope rally' that many thought would last until Obama's inauguration seems to be at least fizzling for now," said Kirby Daley, senior strategist at Newedge Group in Hong Kong.

Bank of China, the mainland's No. 3 lender, fell 8.4 percent to $1.96 Hong Kong dollars after billionaire Li Ka-shing's foundation sold more than $500 million worth of shares in the bank, becoming the latest investor to cut its investment in China's financial sector.

Struggling investment firm Royal Bank of Scotland said it may also sell its own stake in the Chinese lender.

The news dragged down the entire banking sector, with ICBC dropping 6.8 percent to HK$3.69 and China Construction Bank skidding 4.4 percent to HK$3.88.

Lenovo Group plunged 26 percent to HK$1.91 after the world's fourth-largest computer maker warned it expects a loss for its latest quarter and will lay off 11 percent of its work force and cut executive pay.

____

On the Net:

Stock Exchange of Hong Kong: http://www.hkex.com.hk

___