Hong Kong stocks slid 1.7 percent on Wednesday, as sharp declines in Shanghai shares prompted a broad sell-off, led by China Mobile and mainland financial plays.
The sell-off followed a morning of quiet trade, as investors took cues from the Shanghai bourse which at one point tumbled more than 5 percent on worries that officials may act to rein in the stock market, which more than doubled last year.
"We're seeing quite a shakeout," said Howard Gorges, vice chairman at South China Brokerage. "The market is taking heat from the government's warning about overheating. But the government doesn't want to kill the market, with all the IPOs coming. But they want to cool it."
The benchmark Hang Seng Index hit an intraday low of 20,008.60 before closing down 354.04 points to end at 20,106.42, a two-week closing low. The China Enterprises index of mainland H shares dropped 1.7 percent to end at 9,602.40, a three-week closing low.
Some believed the bull market trend was still intact. "The funds remain in the market," said Kenny Tang, associate director at Tung Tai Securities. "Every week, the market worries about interest rate hikes. I think after the rate hike is announced, the market will retrace its losses."
Turnover was HK$50.6 billion (US $6.5 billion) compared with Tuesday's HK$37.6 billion. Mainland financials were among the biggest losers. The index of mainland insurers and lenders slid nearly 2 percent. China Construction Bank sank 2.1 percent to HK$4.60.
China Life was hammered 3.4 percent to HK$22.80. Ping An Insurance (Group) Co of China Ltd declined 1.7 percent to HK$37.70. China's securities regulator has approved a plan by the country's second-largest life insurer to issue 1.15 billion A shares, the Financial News reported.
Among mainland property plays, China Overseas Land and Investment Ltd tanked 3.7 percent to HK$8.63 and Guangzhou R&F Properties Co Ltd fell 3.7 percent to HK$15.08. China Mobile, the day's most active stock, slumped 3.2 percent to HK$71.60. CNOOC Ltd dropped 0.9 percent to HK$6.64 after Goldman Sachs downgraded its stock rating to neutral from buy after China's top offshore oil producer lowered its production guidance.
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