Worst is not over yet...

HONG KONG (Thomson Financial) - Hong Kong shares closed a skittish session lower on Wednesday after a slump in the mainland markets prompted investors to dump Chinese stocks in late trade, driving the key index below the 24,000-point level. The Hang Seng index finished down 327.12 points or 1.4 percent at 23,984.57. Turnover was $HK83.4 billion ($10.7 billion). The Shanghai Composite Index closed down 5.5 percent, with banks leading the rout amid worries over a possible new round of monetary tightening. Subscriptions for Jinduicheng Molybdenum's initial public offering also took away funds from the secondary market. Mainland insurers were among the major decliners in Hong Kong, with China Life Insurance Co down 3.7 percent at $HK 29 and Ping Ang down 3.9 percent at $63. Fresh worries over the global economy sparked by an IMF report on the widening credit crisis also weighed on local shares. On Tuesday the IMF said worldwide losses stemming from the subprime mortgage crisis could come in close to $1 trillion, much more than earlier projections, as the effects spread in the global economy. "The worst of the crisis is not yet over. It may last until the end of the year. Investors will go for cover and sell their holdings," said Francis Lun, general manager at Fulbright Securities. Oil refiner China Petroleum & Chemical Corp. (Sinopec) tumbled 3.8 percent to HK$7.01. Oil prices rose toward $109 per barrel in Asian trade this morning before the release later Wednesday of the weekly report on U.S. energy stockpiles. Mainland offshore oil producer CNOOC slid 2.8 percent to HK$11.98. Market watchers believe oil industry fundamentals will not support the current high prices for crude. A correction in oil prices could trigger a slide in CNOOC's share price, which had risen sharply on record high crude prices. PetroChina was down 3.6 percent at HK$10.26. Shares in Hong Kong-based fashion retailer Esprit Holdings fell on worries over lower retail sales in Germany, its single biggest market. The stock was down 3.8 percent at HK$90.00. Cellphone carrier China Unicom lost 3.2 percent at HK$16.36. Air China fell 6.4 percent to HK$6.14 on reports that it will borrow 80 billion yuan from banks to boost its working capital and sell up to 400 million shares on the mainland to fund its aircraft acquisition. China's biggest international airline is expecting the number of passengers it carries to rise 15 percent this year to 40 million. China Coal Energy rose 1.4 percent to HK$15.04 before the company's announcement of its 2007 earnings later Wednesday. China's second-largest coal company is expected to report 86.4 percent growth in net profit to 5.91 billion yuan, according to analysts surveyed by Thomson Financial. Metal stocks corrected after Tuesday's sharp rally. Gold Miner Zijin Mining tumbled 7 percent to HK$8 and Angang Steel slid 4 percent to HK$18.96. Aluminum Corp of China (Chalco) fell 4 percent to HK$12.96.