Leading Hong Kong shares tumbled two percent on Monday amid rekindled Sars fears and as Beijing's determination to cool its red hot economy bruised China plays.
Shares in mini-motor maker Johnson Electric Holdings Ltd dived 19.2 percent to HK $6.70, their lowest level since November 2001, after the firm stunned investors with a profit warning.
It warned on Friday that its full-year profit could fall 20 to 25 percent due to plant restructuring costs and higher sales expenses.
The benchmark Hang Seng Index skidded 2.03 percent, or 251.26 points, to 12,132.68.
The H-share index of Hong Kong-listed, China registered firms tumbled 5.67 percent to 4,248.42 after Beijing reiterated it would use all means to curb over-investment.
"Sentiment was severely hit by Sars and Beijing's economic readjustment measures," said Alex Wong, a research director at RexCapital Asset Management. "Its really hard to say when the mood will be stabilised."
Market volume totalled HK $13.28 billion (US $1.7 billion), compared with a 20-day moving average of HK $15.33 billion.
Asia Aluminium Corp of China (Chalco), Maanshan Iron & Steel Co Ltd and Jiangxi Copper Co Ltd were top H-share losers.
China reiterated no repetitive investment and construction projects would be allowed in a bid to curb an overheating of the world's six-largest economy.
Steel, aluminium smelters, auto and property are the main targets of Beijing's crackdown.
Market players said Beijing's effort to cool its blistering economic growth would dampen investor interest and curb fund flows into Hong Kong equities.
Chalco lost 10.45 percent to HK $4.925, Jiangxi Copper dived 10.95 percent to HK $3.05 and Maanshan Iron & Steel slipped 11.97 percent to HK $2.575.
Chinese insurance firms China Life Insurance Co Ltd and PICC Property and Casualty Co Ltd were also bruised as investors punished the pair for not paying out dividends after the two announced their full-year results on Friday.
"Insurance stocks have always been perceived as defensive plays that should pay out nice dividends," said Linus Yip, a strategist at First Shanghai Securities Ltd.
PICC lost 7.63 percent to HK $2.725 while China Life fell 5.13 percent to HK $4.625.
Tourism-related shares, such as Cathay Pacific and China Southern Airlines, were hammered after China reported on Sunday four new suspected cases of Severe Acute Respiratory Syndrome in Beijing, days after the first reported death in the country from the virus since a major outbreak last year.
Hong Kong's biggest airline, Cathay Pacific, fell 2.35 percent to HK $14.55.
China's largest carrier, China Southern, dipped 4.79 percent to HK $3.475.
The company also reported a 2003 net loss of 358.27 million yuan over the weekend as Sars bit into full year profits.
Retail firms, which depend heavily on business from mainland China visitors, also took a beating. Cosmetics retailer Sa Sa International Ltd slipped 4.8 percent to HK $2.975.
Blue chips fell across the board. Property counters, which have a heavy weighting in the Hang Seng index, fell on news that sales of residential units over the weekend fell 62 percent to 93 units from the 242 units sold in the previous weekend.
Index heavyweights Sun Hung Kai Properties Ltd skidded 2.49 percent to HK $68.50 and rival Cheung Kong (Holdings) Ltd lost 2.41 percent to HK $60.75.
The property sub-index fell 2.15 percent to 15,359.37.