Hong Kong stocks fell on Wednesday, in its biggest one-day percentage loss in more than five months, as sliding overseas markets triggered a sharp sell-off amid concern that US interest rates could head higher.
The benchmark Hang Seng index dropped 1.76 percent, or 279.94 points, to 15,642.81 after the benchmark Korea Composite Stock Price Index (KOSPI) closed down 2 percent and the Tokyo Nikkei fell 0.78 percent.
"We're following overseas declines, as Wall Street edged down on inflationary pressure, which has triggered selling in regional markets," said Alex Tang, research director at Core Pacific-Yamaichi International (Hong Kong) Ltd.
Interest rate concerns and a delay in the launch of a much-anticipated Microsoft operating system that hit some technology issues were blamed for the losses.
About 80 points of the fall in Hong Kong's blue chips, however, was due to index heavyweight HSBC Holdings Plc's trading without the right to the latest dividend, analysts said.
Investors were also cautious before a number of key events, including the earnings reports from blue chips Hutchison Whampoa Ltd and Cheung Kong (Holdings) Ltd due on Thursday and the US Federal Reserve meeting next week.
"I don't see any major buying ahead of the FOMC meeting," Tang said. Rate worries brought down the Hang Seng properties sub-index to 19,179.64, a 1.72 percent loss. Hong Kong's biggest developer Sun Hung Kai Properties Ltd slipped 1.9 percent to HK$78.15; Sino Land Co fell 1.7 percent to HK$11.35.
A larger-than-expected jump in February's underlying US producer prices and optimistic comments about the US economy's health from Federal Reserve Chairman Ben Bernanke suggested rise in interest rates could last longer than some had expected.
The China Enterprises index of H-shares, or shares in Hong Kong-listed mainland firms, erased earlier gains to end the day down 1.27 percent to 6,479.15.
Analysts said China plays faced selling pressure as the country plans to make its most significant changes to its consumption taxes in 12 years.
"The tax measures are triggering some concerns and could put pressure on overall consumption," said Philip Chan, head of research at Capital Securities.
Mainland automakers fell as levies would be raised on the most polluting cars. Denway Motors Ltd slumped 5.4 percent to HK$3.075 while Qingling Motors Co Ltd sagged 2.4 percent to HK$1.22.
Mobile services provider Tencent Holdings Ltd fell 5.5 percent to HK$10.25 after reporting its 2005 net profit rose 10 percent to 485 million yuan.
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