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Hong Kong Stocks Plunge Early On

January 12, 1998

HONG KONG (AP) _ Share prices in Hong Kong plunged in early trading Monday, following widespread fears over the weekend that a Hong Kong-based investment bank would shut down.

The key Hang Seng index plummeted 814.54 points, or 9 percent, in the first five minutes of trading, to 8,080.10 points, just shy of the psychologically important 8,000-point level.

But prices began to rise slightly after the initial drop. Twenty minutes into trading, the index was at 8,232 points, a drop of 7.4 percent.

The index has fallen nearly 17 percent in the past week.

Fears had been building over the weekend that the major Asian investment bank of Peregrine Investments Holdings Ltd. would shut down.

The Hong Kong-based Peregrine has large investments in Indonesia and has been battered by that country’s recent currency meltdown and other economic woes.

Peregrine spokesmen were unavailable for comment, and investor hotlines established by Peregrine were either busy or went unanswered.

Japanese stock prices also fell early Monday, pulled back by a sharp decline on Wall Street on Friday because of growing concern over economic turmoil in Asia. The dollar rose against the yen.

The Nikkei Stock Average shed 253.64 points, or 1.69 percent, dropping to 14,741.46 points in the first 30 minutes of trading. On Friday, the average lost 24.08 points, or 0.16 percent.

Traders said Monday’s drop came in response to Friday’s poor showing on the New York Stork Exchange, where the Dow Jones industrial average tumbled 222.20 points to 7,580.42.

Sentiment in Tokyo remains weak amid recent plunges in stock markets in other Asian nations, including Indonesia and the Philippines, traders said.

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