Hong Kong stocks fell to their lowest level in 2-1/2 months on Monday as investors booked profits on recent market darlings like China Unicom after Wall Street hit new 2005 lows last week. "When you have profit, you better grab it these days, otherwise you'll easily lose it," said Alfred Chan, chief dealer at Cheer Pearl Investment. The blue chip Hang Seng Index plumbed a low of 13,320.53 - a level last seen on November 4 - before closing down 0.70 percent, or 94.03 points, at 13,386.99.
Turnover at HK$16.4 billion ($2.1 billion) was slightly ahead of Friday's HK$15.9 billion. Traders said the breach of chart support at 13,400-13,500 was a negative sign and suggested further downside was likely.
China Unicom Ltd lost 2.4 percent to HK$6.10 after gaining as much as 11 percent in the last few sessions on hopes that the Chinese government will restructure key players in its maturing telecoms market.
Other decliners included Kingway Brewery Holdings Ltd, which slumped 10.57 percent to HK$2.75 after surging over 45 percent last week on news that the world's fourth-biggest brewer Heineken was looking to increase its stake in the Chinese beer maker.
Elsewhere, Hong Kong's dominant phone company PCCW Ltd shed 3.24 percent to HK$4.475, after earlier hitting a 16-month low of HK$4.425 as investors fretted about its deal with China Netcom Group, which is buying 20 percent of the company.
S&P equity research unit last Friday downgraded its rating on PCCW, saying the deal was earnings dilutive. Investors were also worried by a lack of details about PCCW's planned investments in China.
Property stocks were also under pressure as investors priced in expectations for an interest rate hike in early February, when the US Federal Reserve policy-setting committee next meets.
Hong Kong's big banks usually follow the Fed but have been able to keep rates relatively steady over the past several months with the banking system awash with funds speculating on a revaluation of China's yuan currency.
"I think it has been said fairly clearly that we are in a long liquidity market and there is no reason for Hong Kong banks to follow suit," David Eldon, chairman of HSBC Holdings Plc, told reporters on Monday.
The Hang Seng properties sub index shed 1.39 percent to 16,287.91 as counters like Hong Kong's largest property firm, Sun Hung Kai Properties Ltd gave up 0.71 percent to HK$69.75.
By contrast, China's top computer maker Lenovo Group Ltd jumped on the back of a report that its proposed $1.25 billion deal to buy IBM's PC-making business could be held up by US regulators over national security concerns.
Analysts had questioned the value of the deal for Lenovo, whose share price has floundered in recent months on management plans to take company forward. Lenovo advanced 7.41 percent to HK$2.175.
Oil prices climbed above $49 a barrel as a blizzard enveloped the US Northeast, boosting demand for heating oil.
On Wall Street, the Dow Jones industrial average shed 0.75 percent to 10,392.99 on Friday, while the Nasdaq Composite Index lost 0.57 percent to 2,034.27.