Panic Sends Hong Kong Stocks Plunging

Panic selling in reaction to the crackdown in China sent stocks in Hong Kong, which reverts to Chinese rule in 1997, plummeting today to their worst loss since the worldwide market collapse in 1987.

In London, Prime Minister Margaret Thatcher came under growing pressure today to re-examine turning over the British colony. The crackdown on the mainland has heightened Hong Kong residents’ anxieties over the colony’s future.

Officials reported a run on some Chinese banks in Hong Kong--the world’s third-largest banking center--after calls to withdraw funds from the institutions to protest the killings.

Some banks said their rate of withdrawal was 30% higher than usual.

The stock exchange lost 100 points in the first minute of trading in its morning session, before closing at 2,085.29, down 590.09 points from Friday. All major shares suffered losses.

Brokers said the exchange was flooded with selling orders, many from overseas investors.

Real estate specialists said property values could fall between 15% and 20% unless the situation in China stabilizes.

“This is the worst scenario come to pass,” said Paul Varty, an executive of a major real estate firm.

Leading British newspapers said China’s military crackdown has intensified doubt that the British colony will be allowed to uphold civil rights and maintain its freewheeling socioeconomic life style under Chinese rule.

Foreign Secretary Sir Geoffrey Howe said today that work on the agreement to turn over the colony has “been put on ice while all these troubles are taking place.”

“But it’s much too soon to conclude that we should set all that to one side, because Hong Kong’s future is inextricably bound up, geographically and historically, with mainland China,” he said in a British Broadcasting Corp. interview.