Hong Kong shares slid 2.1 percent and China's main index fell 0.7 percent on Wednesday, dragged down by a worrying indication of weakening industrial activity in China at a time risk aversion remains high in markets. The Hang Seng Index slid below a psychological support of about 18,000 after a steep fall in HSBC flash manufacturing purchasing managers' index (PMI), the earliest indicator of China's industrial activity, which slumped from 51 in October to November's 48, a low not seen since March 2009.
The index, which rose 0.1 percent on Tuesday, finished on Wednesday at 17,864.43.
The China Enterprises Index of top mainland companies listed in Hong Kong finished down 2.76 percent at 9,476.15. The PMI data "really hurts investor confidence," said Chen Yi, an analyst at Xiangcai Securities in Shanghai. "And it also shows the economy is in a downtrend."
Also weighing on the Hang Seng Index was rotational selling and profit-taking interest on materials and financial stocks, tracking softer overseas markets on eurozone debt jitters and lacklustre US growth data. In Hong Kong, China Coal led falls, losing almost five percent, Chalco fell 4.1 percent, and China Shenhua was down 3.6 percent. Also under pressure was PCCW Ltd, which ended down 3.3 percent after pricing the initial public offering of HKT Trust at the bottom of an indicative range, with global market turmoil denting demand despite the high yield offered.
China's main stock index ended at its lowest level in a month, as financial shares fell on worries, sparked by the preliminary PMI survey, that the world's second biggest economy may be edging towards an economic hard landing. Analysts said the PMI data had prompted such fears as China's main export markets Europe and the United States face recession.
The benchmark Shanghai Composite Index ended at 2,395.1 points, below the key psychological level of 2,400 points, while the financial sub-index dropped 1.5 percent. Analysts said an outflow of money could be another reason for the weak financial sector. Haitong Securities was among the biggest drag in the financial sector, dropping 5.2 percent, while Shanxi Securities fell 3.3 percent.