Hong Kong shares ended over 100 points, or almost one percent, lower on Friday with many investors sidelined ahead of the release of US inflation data due later in the day, expected to raise the likelihood of another rise in interest rates.
A lot of market liquidity is also expected to be soaked up by the huge initial public offering from China Construction Bank (CCB), which opened to retail investors on Friday with order books set to close on October 19.
CCB is due to raise as much as $8.15 billion in what is set to be the world's largest IPO this year. "Interbank rates have firmed recently because of the CCB IPO and that was already negative for the stock market in that liquidity has been drying up," said Philip Chan, head of research at Capital Securities.
The one-month interbank rate rose to 4.41 percent on Friday from 4.29 percent a week ago. Hong Kong's blue chip Hang Seng Index closed 0.93 percent, or 135.95 points, lower at 14,485.88.
Turnover increased to HK$21.86 billion (US $2.80 billion) from HK$16.26 billion on Thursday. Investors were also sidelined ahead of key US inflation data.
"It is an important indicator for future interest rate moves," said Herbert Laud, research director at Celestial Asia Securities. "A higher than expected inflation figure may deepen investor worries over further interest rate hikes, which will hit the market as a whole."
According to analysts polled by Reuters, US consumer prices likely rose in September due to a surge in energy prices after a pair of powerful hurricanes hammered the oil-producing US Gulf region.
Economists polled by Reuters on average expected that the Consumer price index likely climbed 0.9 percent last month following August's 0.5 percent increase.
Shares of China Paradise Electronics Retail Ltd, the country's number-three consumer electronics retailer, ended their first day of trading 5.6 percent above an IPO price of HK$2.25.
The stock ended at HK$2.375 in a US $131.5 million market debut in Hong Kong. The counter, which drew demand for 134 times the shares initially on offer to retail investors, moved in a range of HK$2.30 to HK$2.40. Elsewhere, market heavyweight HSBC Holdings eased 0.41 percent to end at HK$121.80, Bank of Communications lost 1.5 percent to HK$3.275, and Bank of China (Hong Kong) fell 0.67 percent to HK$14.85.
Interest rate-sensitive property stocks were also under pressure on fears that further interest rate hikes may dampen property demand. Shares in Cheung Kong, which have fallen 3.7 percent over the month, fell a further 1.17 percent to end at HK$80.45 on Friday.
Sun Hung Kai Properties was down 0.13 percent to HK$75.10, Swore Pacific lost 0.57 percent to HK$69.80, and Henderson Land was down 1.26 percent to HK$35.40.
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