Hong Kong stocks slid across the board on Monday in their fourth-straight declining session, with property stocks leading the losses after accelerating US inflation damped the outlook for deeper US rate cuts.
New issue Uni-President China Holdings Ltd, the mainland China arm of Taiwan's largest food and beverage conglomerate, outperformed as investors sought exposure to China's consumption story. Shares gained momentum through the session, ending at HK$4.75, up 12.6 percent from their IPO price of HK$4.22.
The benchmark Hang Seng Index ended down 3.5 percent, or 967.06 points, at 26,596.58. The China Enterprises index of H-shares, or Hong Kong-listed shares in mainland companies, fell 3.6 percent, or 566.07 points, to 15,391.39.
Mainboard turnover was HK$104.4 billion (US $13.4 billion) compared to Friday's HK$111.8 billion. "We have a lot of negative news in the market, some of which people thought had been discounted," said John Koh, investment director at MEAG Hong Kong Ltd. "The downside is reflecting worries that we're headed into a recession. I do think there's a possibility of a recession, but if there is one, it won't drag on for two to three years."
Rate-sensitive property issues underperformed on the US rate outlook. Hong Kong's rate cycle tends to follow the United States' because its currency is pegged to the US dollar. Cheung Kong (Holdings) Ltd slid 5.7 percent to HK$131.90 and Henderson Land dived nearly 8 percent to HK$67.50.
The Hang Seng property sub-index closed the day down 6.1 percent. Mainland lenders were hit further after China said the country would shift to a "tight" monetary policy after a decade of "prudent" policy.
China Construction Bank dropped 3.4 percent to HK$6.57 and the country's top lender, Industrial & Commercial Bank of China, slid nearly 4 percent to HK$5.5. China's tightening stance also kept investors away from mainland property developers.
China Overseas Land and Investment skidded 5 percent to HK$14.20 and SPG Land sslumped 8.2 percent to HK$5.6. Alibaba.com sank 7 percent to HK$26.10, earlier setting a new low since its November listing. China Eastern Airlines Corp sagged 6.4 percent to HK$6.3 as prospects for a bidding war in the mainland carrier were dimmed after its chairman said the deal with Temasek Holdings and Singapore Airlines was the "final deal".
One of the day's bright spots, GOME Electrical Appliances, China's top electronics retailer, jumped 3.1 percent to HK$18.24, after saying on Sunday it would have a dominant position in key Chinese markets after taking over the management of Beijing-based rival Dazhong Electrical Appliances.