A downward revision of the 2008 U.S. economic forecast by the U.S. Federal Reserve, coupled with an upsurge in crude oil prices, has resulted in a slump in Hong Kong’s stocks. The current slump could see the key index going through its worst month post 1997. The revised 2008 economic forecast has shown its impact on Chinese exporters. These exporters have registered declines, with Li & Fung Ltd., the company selling products to American giant WalMart Stores Inc., leading the way. The revised economic forecast is not the only factor responsible for the slump in Hong Kong stocks. Prices of crude oil have gone up to close to $100 per barrel. The speculation about a possible rise in fuel cost based on this increase has had its impact as well, with China Eastern Airline Corp. announcing a possible slump among carriers based on this speculation. The business community is increasingly feeling nervous about the slowdown in growth in the U.S. This factor, coupled with the rising oil prices, has resulted in increasing cost, according to Renault Kam, who is a director of Atlantis Investment Management Ltd. and is based out of Hong Kong. Prices continued to fall this month at China Mobile Ltd. and China Life Insurance Co. This fall was partly due to a delay in implementation of a plan that would allow Chinese citizens to invest in Hong Kong equities directly. The downward slide was reflected in the Hang Seng Index and the Hang Seng China Index, both of which registered sharp losses. The Hang Sang Index fell by 4.2% or 1,153.02 points, stabilizing at 26,618.19, while the Hang Sang China Index fell by 5.2% to close at 15,9993.50. The Hang Seng Index fall is the largest market fluctuation seen in markets that are considered within global benchmarks. The closing point of 26,618.19 is the lowest it has registered post September 25. The Hang Seng China Index, responsible for tracking 43 H-shares of companies based out of China, also registered its lowest close post September 21. Charles Huang, who is BNP-Paribas SA’s director of China research in Hong Kong, predicted that over the next one year, the Hang Seng Index might register downslides of up to 20,000 points, owing to a possible slowdown in the U.S. markets and a reduction of fund-inflow into Hong Kong. Many Chinese exporters have registered losses in the current scenario. Shares at Li & Fung fell by HK$1.30, a 4.3% slump that saw it closing at HK$29.10. Another company that showed declining share prices was Yue Yuen Industrial (Holdings) Ltd. Yue Yuen Industrial (Holdings) Ltd. is the biggest sports shoe manufacturer in the world, with clients like Nike Inc. The company registered a loss of HK$1.30 per share, a 4.9% slump that saw its shares closing at HK$25.15. HSBC Holdings Plc also saw share prices falling by HK$3.40, a 2.5% slump that saw it closing at HK$131.80. This is, incidentally, HSBC’s lowest closure post April 2006. Also, from today, investors buying HSBC stock would not be eligible for the interim dividend of 17 U.S. cents. A rise in crude oil futures to $98.03 per barrel in New York has had a telling impact on the airlines industry in China. China Eastern shares fell by 39 cents, a 6.5% slump that saw it closing at HK$5.66. Air China Ltd. registered a 36-cent downslide, ending at HK$8.16, while Cathay Pacific Airways Ltd. shares fell by 14 cents to close at HK$18.26 a share.