Hong Kong shares ended the morning session lower on Monday, extending losses from late last week, with handset maker Foxconn International Holdings leading the rout after issuing a profit warning.

Investors were also discouraged by the continued slump on the Chines stock markets and the weakening Hong Kong economy, signalling sluggish earnings for companies. The benchmark Shanghai Composite Index was down 3.1 percent at midday.

Hong Kong’s gross domestic product unexpectedly shrank 1.4 percent in the second quarter from the previous three months, its first drop in five years, the government said on Friday after the market close.

Japan and the eurozone area last week reported that their economies declined in the second quarter, raising fears that the financial and property slump, declining consumer spending and investment in the United States are spreading into other major economies. The U.S. is the top destination of electronics and other exports from Asia, Europe and the Middle East.

“There are so many negative news out there: China remains down, the U.S. stock market is not improving, the global economy is slowing down,” said Jackson Wong, investment manager at Tanrich Securities. “All these factors are affecting sentiment. Investors are very cautious and there is no major buying interest in any sector. Everything is going down.”

The Hang Seng Index lost 246.11 points or 1.2 percent to end the morning at 20,914.47.

Foxconn International plummeted 19.6 percent to HK$6.18 after the company said late Friday that its first-half net profit probably declined significantly from a year ago.

Local developers tumbled on worries the feeble Hong Kong economy may discourage people from investing in real estate. Top developers Sino Land slid 5 percent to HK$13.18 and Sung Hung Kai Properties dropped 2.3 percent to HK$107.40.

($1 = HK$7.80)

Source: http://www.afxnews.com

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