Hong Kong stocks slid 1.39 percent on Friday, in their biggest one-day percentage drop in more than seven weeks, as fears of further interest rate rises amid high oil and commodity prices hurt overseas markets.
Ahead of the outcome of the quarterly Hang Seng index review due later in the day, investors sold off shares in companies, such as Lenovo Group Ltd, that are seen likely to be dropped from the benchmark index.
The benchmark Hang Seng index closed at 16,901.85 for a weekly loss of 0.66 percent.
"The market is overreacting," said Louis Wong, research director at Phillip Securities. "It remains uncertain whether the Fed will raise interest rates, but before the release of the US consumer price index next week, the market has overreacted." Among the stocks seen as likely to exit the blue chip Hang Seng index, Lenovo sank nearly 2 percent to HK$2.675 and micro-motors maker Johnson Electric Holdings Ltd extended its slide from Thursday, falling 1.7 percent to HK$5.95, having earlier tapped 4-1/2-year lows. But Hong Kong Exchanges and Clearing Ltd, the day's fifth most active stock, jumped nearly 2 percent to HK$64.60, earlier setting a record high, as investors bet Asia's largest listed bourse would join the Hang Seng index.
Bolstered by Sinopec Corp, the China Enterprises index of H-shares trimmed earlier losses to end up 0.13 percent at 7,377.94.
Sinopec, Asia's largest refiner, jumped almost 4 percent to HK$5.35 after industry officials said that China may raise retail fuel prices in coming weeks, for the second time since March, to help refiners offset $70-a-barrel crude costs.
But some market watchers said H shares could face pressure in the week ahead amid possible additional tightening steps by Beijing. China's central bank raised interest rates in late April for the first time since October 2004.
Electronics retailer GOME Electrical Appliance Holding Ltd jumped 5.7 to HK$7.45 after US consumer electronics retailer Best Buy Co Inc said on Friday it would acquire a majority stake in Chinese appliance retailer Jiangsu Five Star Appliance Co Ltd for $180 million. Turnover was HK$34.9 billion (US $4.5 billion), down from Thursday's hefty HK$44.8 billion.