Leading Hong Kong stocks ended at a 2004 low on Wednesday as rate-hike fears rattled sentiment, while China plays continued to crumble on economic overheating worries.
The H-share index of China registered firms listed in Hong Kong fell 4.26 percent, or 189.55 points, at 4,258.11, sharply under-performing the blue chip Hang Seng Index.
The benchmark index dipped 1.35 percent, or 167.07 points, to 12,227.30 after sliding below 12,200 in early trade.
Volume on the main market totalled HK $17.62 billion (US $2.26 billion), versus a 20-day moving average of HK $15.2 billion.
Market players said H shares are undergoing a correction amid fears Beijing will further cool the red hot economy, and a rebound in sentiment could be a long way off.
"Unless Beijing confirms that the tightening measures in place are sufficient, uncertainties over H shares will linger," said Kitty Chan, a portfolio manager at RexCapital Asset Management.
Fretful investors were dumping China plays in general, even though China only planned to cool down the property, automobile, steel and aluminium smelter sectors.
China's largest independent electricity producer Huaneng Power International Inc tumbled 7.64 percent to HK $7.25 while China Life Insurance Co Ltd lost 3.74 percent to HK $4.50.
Mini-car and helicopter maker AviChina Industry & Technology Co Ltd was down 12.2 percent to HK $1.08.
Investors also sold off China's largest offshore oil producer CNOOC Ltd on news that it is being investigated by Hong Kong's stock exchange. CNOOC slumped 4.76 percent to HK $3.
Hong Kong Exchanges and Clearing (HKEx) said it is probing CNOOC after the firm made large deposits to a finance firm controlled by its parent.
"The news have some impact on sentiment, but in fact, all Chinese-oriented firms are down," said RexCapital's Chan.
Meanwhile, interest-rate hike fears have dragged all but five of the 33 blue chips lower.
US Federal Reserve Chairman Alan Greenspan said the country's economy seemed to have turned the corner and the threat of deflation was over. He also commented that the US banking system was in good shape to handle higher interest rates.
Index heavyweights and leading property developers Sun Hung Kai Properties Ltd and Cheung Kong (Holdings) Ltd skidded. SHK fell 3.17 percent to HK $68.75 while Cheung Kong lost 2.76 percent to HK $61.75.
Another heavyweight Hutchison Whampoa Ltd, a ports-to-telecom conglomerate, also weighed on the market, losing 2.25 percent to HK $54.25.
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