Rumors of a capital crisis due to overexposure to distressed U.S. securities drove shares of a Hong Kong bank sharply lower today (Wednesday), as concerned customers lined up outside retail branches to withdraw deposits.

The Bank of East Asia Ltd. (OTC ADR: BKEAY), commonly referred to as BEA, asked Hong Kong authorities to investigate “malicious rumors” spread mainly via cell phone text messages that called the third-largest Hong Kong lender’s liquidity into question.

“The management of BEA hereby states in the strongest possible terms that such rumors have no basis in fact,” BEA said in an e-mailed statement today. “The bank’s financial position is sound and stable.”

Hong Kong-traded shares of BEA dropped 11% to a new 52-week low as investors and retail customers alike lost confidence in the bank. The stock recovered slightly in late afternoon trading to end the …

The Hong Kong stock market jumped 2.1% yesterday, is at a five-week high, and is now over 23,000. Hong Kong is an interesting market. It enjoys the rapid economic growth of mainland China but not the high interest rates. The reason is that the Hong Kong dollar is pegged to the U.S. dollar and therefore must mirror our Federal Reserve's moneytary policy. High growth + low interest rates = a winning combination.

We’d like to announce a new 12-page complimentary special report on Asian and Indian stocks, courtesy of our friends at Elliott Wave International.

Investment Opportunities for Asia’s Big 6 Markets will give you specific forecasts and valuable commentary …

The name may sound funny, but the Little Sheep (0968.HK) restaurant chain is a business well worth your investigation. Little Sheep is a chain of 'hot pot' restaurants that is famous for its Mongolian-style mutton dishes. Little Sheep is a huge business in China. In 2006, it grabbed an amazing 11.8% of all the full-service restaurant business in China! There are currently around 350 Little Sheep restaurants around China, but the company will be using the IPO proceeds to finance an aggressive expansion plan. At 27 times 2008 earnings, it is a little pricey, so I would wait for a pullback. You will have to wait though because U.S. investors are not allowed to buy Hong Kong IPOs for 40 days.