Hong Kong stocks fell nearly 5 percent on Thursday, as weak US and mainland stock markets damped investor confidence, undoing gains from the last session when global equity markets cheered a credit bailout by central banks.
China Railway Construction Corp, the world's biggest IPO so far this year with listings in Hong Kong and Shanghai, rose in its first day of trade, although poor market conditions weighed.
The infrastructure play, which drew record demand for its $5.4 billion Hong Kong IPO, was the day's most active stock, finishing at HK$12, up 12 percent from its IPO price of HK$10.70. It rose as much as 18 percent to HK$12.66.
The market deepened its losses in the afternoon, taking cues from mainland equity markets. Investors were worried that China may impose further tightening measures as inflation rose to near 12-year highs.
The benchmark Hang Seng Index closed near the day's low, down 4.8 percent, or 1,121.12 points, in its worst one-day percentage loss since February 6. The index ended at 22,301.64. The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, fell 6.1 percent, or 783.29 points, to 12,094.06.
China Railway's debut helped to drive mainboard turnover to HK$106.8 billion (US $7.6 billion), the highest level since early February. Oil refiner Sinopec Corp was among the worst performing blue chips as runaway crude prices weighed, finishing down 8.4 percent at HK$7.
Transport stocks were also hit by high oil prices. China Southern Airlines plunged 9.7 percent to HK$6.23. Hong Kong flagship carrier Cathay Pacific Airways tumbled 4.5 percent to HK$15, having earlier tapping 1-year lows.
The prospect of further monetary tightening weighed on mainland financials. China Life, the country's top life insurer, dropped 6.3 percent to HK$27.65 and China Construction Bank shed 6.1 percent to HK$5.38.