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MARKETS & INVESTING | Staff Reporter, Hong Kong

Hang Seng loses a fifth of its value; prospects bleak

After losing a fifth of its value in 2011, the Hang Seng Index staggered into 2012 facing the stark reality of even more crippling losses.

HSI capped the grim year of 2011 by shedding 1.1 percent during the final trading week in December, capping its plunge in value to 20 percent for the entire year.

“This year, the world was swayed by the European debt crisis,” said Takashi Aoki, who helps manage the equivalent of $1.5 billion at Tokyo-based Mizuho Asset Management Co. 

“More investors think the U.S. economy is firmer and growing slowly, and this will last for a while. Europe has entered a recession but it’s unlikely to deteriorate badly. Emerging countries are transitioning from economic slowdown to faster growth again.”

HSI’s retreat was led by banks and developers as China intensified measures to curb inflation and property prices. Esprit Holdings Ltd., a clothing retailer, led 2011’s losers, falling 73 percent on concern the failure to contain Europe’s debt crisis will further undermine the company’s brand in its biggest market.

The broader MSCI Asia Pacific Index lost about $1.58 trillion in 2011 amid concern Europe’s debt crisis will drag the global economy into recession in 2012.

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