Hong Kong shares closed 1.9 percent lower on Friday as brokers took to margin calling ahead of the weekend amid mounting global uncertainties on the back of rising inflation and slowing growth. Reflecting the caution among investors, the June Hang Seng Index futures tumbled 660 points to 22,446.
Shipping stocks led the downtrend on Friday, falling sharply after the global freight benchmark plunged the most in 20 years on worries over slowing Chinese demand for iron ore. The Hang Seng Index closed 431.56 points lower at 22,592.30, its lowest close since March 25.
The benchmark index lost 7.4 percent in the shortened trading week, mainly in reaction to harsher-than-expected credit tightening measures by Beijing, which raised the amount that lenders must hold in reserve by a full percentage point.
"The market has fallen in very light volumes today, indicating that there is no panic selling just caution about the global economy," said Andrew Sullivan, sales trader at Mainfirst Securities. The mainboard turnover fell to HK$59.07 billion ($7.57 billion) from HK$77.4 billion on Thursday.
Index heavyweight HSBC Holdings dropped 1.4 percent and China Mobile shed 2.5 percent. The China Enterprises Index of top locally listed mainland stocks slid 2.5 percent, hurt by a 3 percent drop in the Shanghai Composite Index. Chinese financials extended losses after Beijing said at the weekend it was hiking the reserve rate at banks by one percentage point by June 25.
China Life fell 2.5 percent and smaller rival Ping An Insurance skidded 3.2 percent. China Construction Bank dropped 2.8 percent and Bank of Communications slid 2 percent. Hong Kong property developers tumbled amid reports that local banks were under pressure to raise mortgage rates as interbank rates had surged to their highest level since March. Cheung Kong Holdings was down 3.1 percent while Sino Land gave up 5.5 percent. China Shipping Development tumbled 7.22 percent and China Cosco plunged 6.4 percent after the Baltic Dry Index fell 8.7 percent on Thursday.